To manage your finances, you need to have an overview of your transactions. But what if you forgot about a transaction because you didn’t record it? That’s where a bank statement comes in. 

What is a Bank Statement?

To put it simply, a bank statement is a financial document that comes from banks and financial institutions. In a bank statement, you will be able to see a detailed summary of the financial transactions you made during a specific period. 

A bank statement is important to an account holder because this provides an overview of your financial health, allowing you to accurately track your expenses. 

Purpose of a Bank Statement

A bank statement has different purposes which include the following:

Financial Decision Making

Being able to have an overview of all your transactions gives you an idea of where you are financially standing. By knowing your financial position, you will be able to make more informed financial decisions.

Expense Tracking

One of the main purposes of a bank statement is to allow you to monitor your expenses over a specific period of time. If you are able to track how much you spend, then you will also be able to set a budget that will prevent you from spending excessively.

Discrepancy Resolution

Sometimes, there are transactions that we are not aware of until we see it in a bank statement. These can either be a forgotten transaction, processing errors, or even unauthorized transactions. Reviewing your bank statement will allow you to catch these discrepancies and resolve them.

Legal Requirements

A bank statement is sometimes required as official documentation to verify financial activity, such as income, expenses, and overall account balance. This serves as proof for various purposes, including loan applications, rental agreements, tax filings, and financial audits.

Types of Bank Statements

There are different types of bank statements that serve distinct purposes from each other. Here are the top 3 bank statement types you’ll most likely encounter:

Periodic Bank Statement

A periodic bank statement is the standard financial document issued by banks on a regular basis, typically monthly or quarterly. It provides a comprehensive summary of an account’s financial activity within the specified period. The statement includes details such as:

• Opening and closing balances – Showing the amount at the start and end of the period.
• Deposits and credits – Salary deposits, transfers, refunds, and any incoming funds.
• Withdrawals and debits – Purchases, bill payments, ATM withdrawals, and other outgoing transactions.
• Bank fees and charges – Including maintenance fees, overdraft fees, and transaction charges.

This statement is crucial for tracking spending habits, reconciling accounts, and proving financial stability when applying for loans, mortgages, or rental agreements.

Electronic Statement

An e-statement is a digital version of a periodic bank statement that can be accessed through email or online banking portals instead of receiving a printed copy. It offers several benefits, including:

• Convenience – Customers can download and access their statements anytime without waiting for mail delivery.
• Eco-friendliness – Reduces paper waste and promotes a greener banking experience.
• Enhanced security – Statements are typically encrypted and require authentication to access, minimizing the risk of physical document theft.
• Easy record-keeping – Digital statements can be stored on a computer or cloud storage for quick retrieval.

Many banks now encourage e-statements as the default option for account holders, as they are both cost-effective and environmentally sustainable.

Mini Statement

A mini statement is a condensed version of a full bank statement, providing a snapshot of the account’s most recent activity. It usually displays:

• The last 5 to 10 transactions – Including deposits, withdrawals, and transfers.
• Current account balance – Helping users quickly check their available funds.
• Transaction timestamps – Showing when recent activities occurred.

Mini statements are typically accessed through ATMs, mobile banking apps, or SMS services. They are useful for individuals who need a quick balance check or want to verify recent transactions without reviewing a full bank statement.

How to Read a Bank Statement (5 Easy Steps)

Step 1: Check the Statement Period

The first thing you have to do is to check the statement period of the bank statement. This will allow you to make sure that you are reviewing the transactions for the correct dates. 

Typically, you can see the statement period at the top portion of a bank statement.

Step 2: Verify Account Information

After checking the statement period, the next thing you need to do is verify your account information. This will help prevent errors if you are managing multiple accounts, or confirm that you are looking at the correct bank account.

Check for the following information:

• Account holder’s name
• Account number
• Bank Details

Step 3: Review the Opening & Closing Balance

Once you’re sure that you are reviewing the correct bank account in the right time frame, the next thing you should check is your opening and closing balance. 

The opening balance is the amount of cash in your account at the beginning of the statement period, while the closing balance is the amount after all deposits and withdrawals.

By reviewing these, you will be able to see if there are any unexpected changes in your bank account during that statement period. Also, make sure to compare the balances with your own records or previous bank statements.

Step 4: Go through Transactions

Now, you should go through each transaction and review them. Categorize them if they are a deposit (credit) or a withdrawal (debit). By doing this, you will be able to catch any unknown withdrawals/transfers, duplicate charges, and/or unexplained fees.

Step 5: Compare with Personal Records

Finally, you should now compare your bank statement and personal records side-by-side. When reviewing your transactions, make sure they are accurate and that there are no missing payments or incorrect charges. 

If there are any errors or suspicious transactions, make sure to report it to your bank immediately.

Bank Statement Example

To help you visualize how to read a bank statement, here is an example of one:

How can PDFRun help you manage your finances?

Knowing your financial position is important when managing your finances. To help you with that, PDFRun can provide you with a fillable bank statement template to help you monitor your transactions.