Why Is It Important To Review Your Bank Statement Each Month?

I still get paper bank statements. Although I hate to admit it, I didn't always open them. But when I opened my last statement, I was shocked to see how much money I was spending on subscription fees. I used my checking account to pay for a bunch of apps and programs I had forgotten about, so I was frittering away cash without even realizing it. That experience showed me why I need to get in the habit of checking my bank statements more often.

So, why is it important to review your bank statement each month? It allows you to keep an eye on your spending, catch mistakes, and identify fraud before it becomes a bigger issue. Taking the time to review your bank statement each month is an easy way to stay financially healthy.

What is a bank statement?

Bank statements are a summary of your bank account activity for a certain period, such as one month. You can receive electronic or paper statements, and they're tools you can use to track your money and spending habits.

Previously, you had to wait to receive a bank statement in the mail. But, with today's online banking and mobile banking apps, you can view your statements at any time on your computer or phone. Plus, there's an added perk: Many banks charge paper statement fees to encourage customers to opt out of mailed statements and sign up for digital statements instead, so using electronic statements can help you save money.

A bank statement can look intimidating — it's often a big wall of text — but understanding what's in it and what sections to look for can make it more manageable. While formats vary by bank or credit union, a bank statement will usually include the following information.

• Account information: The statement will list your account details, including your account name, account number, and the contact information for customer support.
• Account summary: The bank statement will have a snapshot of key information, including your beginning account balance, total deposits and withdrawals for the statement period, fees charged, and your ending account balance.
• Interest summary: If you have a savings account or interest-bearing checking account, the statement will list how much interest you earned during the statement period.
• Transaction activity detail: The statement will contain a list of every transaction you made during the month, including debit card transactions, checks, ATM withdrawals, and cash or electronic deposits. It will also include any bank fees charged, such as monthly maintenance fees or out-of-network ATM withdrawal fees.

Why you should review your bank statement monthly

If you're like me, you may just check your bank statement to make sure you have enough cash in your account. But, as I found out, not digging into the nitty-gritty details can be an expensive mistake. Reviewing your bank statement can help you protect yourself and stay in control of your finances. Here's why reviewing a bank statement can be so effective.

You can spot trends

When I'm stressed, the last thing I want to do is cook. So, I tend to use food delivery apps when life gets complicated. Reviewing a recent bank statement, I was shocked at how much I spent on Uber Eats. It was a wake-up call to get back to preparing my own meals to avoid blowing my budget.

Perhaps you tend to impulse shop after payday, spend too much at happy hour with coworkers, or sign up for way too many streaming apps. Whatever the case may be, reviewing your bank statement helps you spot similar issues and adjust your spending for better financial health.

You can find opportunities to save money

When you review your bank statement, you may find you're losing money unnecessarily. For example, you may be able to avoid a monthly account fee if you maintain a certain balance, so transferring cash from your online savings account to your checking account can eliminate that charge.

You may also find that you paid $10 in ATM fees because the ATM you normally use is outside of your bank's network. By using your bank's ATM locator tool, you can find a convenient fee-free ATM and save money.

You may catch errors

Banks can make mistakes too. A debit card purchase may have gone through twice, or an extra digit might have gotten added to your withdrawal amount. As long as you dispute the transaction quickly, you should be able to get your money back.

You can catch fraudulent transactions

Unfortunately, identity theft and banking fraud are common. In fact, a Federal Reserve survey found that debit card fraud accounted for 39% of fraud-related losses last year for financial institutions.

If someone compromises your bank account or steals your debit card, time is of the essence. Depending on when you report the incident, you can avoid losing money. If you wait, you could end up losing hundreds of dollars or even all the money, as the table below shows.

You'll learn about upcoming account changes

Your bank statement may contain notifications about changes that will occur to your account. For example, your account may have a different annual percentage yield (APY), a new monthly fee, or a new minimum bank account balance requirement. This timely information can help you make decisions to avoid fees or find better interest rates.

Best practices for reviewing bank statements

Now that you know how useful a bank statement can be, here's how to get in the habit of reviewing your statements without it causing you stress.

• Pick a date: Set a date for yourself and treat it like a non-negotiable appointment. For example, I use the last Sunday of every month to sit down with a giant mug of tea and review my bank and credit card statements. You can set up reminders on your phone or online calendar to help you remember.
• Compare balances: Look at your beginning and ending balances for the statement period. Make sure they line up with what you expected.
• Scan your transactions: Look at your financial transactions and check for common errors, like duplicate items. Also, check for unexpected fees or subscriptions that you no longer need and would benefit from canceling.
• Look for unusual charges: Fraudulent transactions aren't always large. Criminals will often complete small transactions to see if your account is still active, and then will complete larger transactions later. So, flag any charge that you don't remember making or that seems strange to you.
• Check for fees: Pay attention to any fees you may have paid, such as monthly maintenance fees, ATM withdrawal fees, or overdraft fees. These are all opportunities to save money going forward.
• Keep your statements: In general, it's a good idea to keep your bank statements for at least one year — and even longer if you have major changes, such as an inheritance payment, that might trigger a tax audit. Being extra, I keep electronic and hard copies; I have my bank statements in color-coded folders by my desk for quick reference.

How to handle issues found on bank statements

If you find unauthorized transactions or fraudulent activity, take action right away so you can recover your money. Contact your bank or credit union, which will often have a 24/7 fraud phone line and may also allow you to report the incident online. Report the date of the unauthorized transaction, confirm the merchant, and specify the amount of the transaction.

For other issues, such as unexpected fees, contact your bank's general customer support line, visit a local branch, or check for an online help option. Sometimes, being polite and explaining the problem calmly can help you qualify for a fee reversal.

FAQs

Bottom line

It may not be glamorous, but reviewing your bank statement is one of the simplest and best ways to save money, track your spending, and protect yourself against fraud. Spending just a few minutes per month checking your statements can make a major impact.

The next time you get a statement in the mail or an email that says "your statement is ready," don't toss it in the trash — set aside time to review it carefully so you can keep on top of your finances. Plus, you can make changes like switching to a new free checking account to save money.

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