A bank statement is a document that is usually sent from the bank to the account holder on a monthly or quarterly basis. It contains account information including the account number, holder’s name, statement date, beginning and ending account balance and all transaction details.
Why are bank statements important?
1. Bank statements are useful as they show you how you are spending your money. Therefore by having this understanding, you will be able keep track of your spending that will also help in better financial decisions.
2. Applying for loans or mortgages – bank statements show all types of transactions and activity including:
- Income such as salary and benefits and expenditure such as bills and subscriptions
- Return direct debit
- Gambling activity
- Negative balances
- Repaying lots of loans at the same time
- High overdrafts
- Bank fees
If there are any issues in the bank statements, lenders can refuse to offer a loan.
3. Help you identify fraud and errors
If you see any unexpected activity, researching the transaction can help you identify whether there was theft or a bank error. Notify your bank as soon as possible to get more protection.
4. Know how much you have
Statements help you see where you stand in terms of how much you have in the bank account. This way you are less likely to miss payments and face penalty fees due to insufficient funds when you keep an eye on your account.
Here is how to manage your bank account to ensure that you have a clean bank account.
1. Check your bank statements on a regular basis – either daily, weekly or monthly to ensure that your records match the bank’s records. You can either check your bank statements electronically or on paper.
2. Report any issues such as bank errors or theft in a timely manner.
If there are any bank fees that are eating away at your savings, speak to your bank to see if they can waiver the fees or open a free current account.
3. Cancel any subscriptions that you are no longer using – this will help you save money along the way.
5. Pay off debts when you can.
6. Be careful where you are spending money. For instance, when playing games on your phone, you may be spending money without realising it. Always check your bank statements to see if your card is linked to various websites that are costing you money.
7. Avoid ‘buy now, pay later’ deals if you know that you can’t keep up with payments or you already have a few set up from previous purchases.
8. Avoid impulse buying and stick to a budget – this way you will be able to control how much you are spending per month.
By having a well-managed bank account, you will be able to make better financial decisions in future, be more reliable such that lenders might be able to approve loans/other types of credit quicker and you will be in better control of your finances as you know where you stand at any given time.