Introduction to Bank Statements - Importance, Requirements, and Benefits
Jan 31, 2023
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Bank statements are generated by banks and financial institutions every month to deliver customers records of their overall financials. Individuals who own a checking or savings account in banks can access these statements online by visiting the bank website or via logging into their net banking portal. There are several good reasons to review your bank statements weekly but the biggest reason customers check their bank statements is to prevent fraudulent activities and ensure they don’t end up paying exorbitant banking fees for account maintenance.
In this article, we will provide an overview of what bank statements contain along with their importance, benefits, and requirements:-
Definition of Bank Statement
A bank statement is a summary of transactions that were processed during a set period of the month. The statement lists bank details, charges, deposits, withdrawals, and deductions, along with the account holder’s name and his account number. Bank statements also show the opening balance of accounts and closing balances too.
What does bank statement contain
Bank statements show cash flow movements to and from accounts. In short, a statement details all the transactions which take place month by month, giving an overview of the account holder’s finances. A typical bank statement contains:-
Other details mentioned on bank statements are:-
Customer service numbers
Special instructions for reporting accounting errors, hijacking, and fraud.
Requirement of bank statement
Bank statements are required by investors, creditors, lenders, business managers, and owners of financial institutions to assess the creditworthiness of individuals. These statements are requested by credit card companies and banks in order to verify borrower applications. Those who are applying for any type of mortgages, loans, or financial assistance will need to furnish their bank statements to demonstrate proof of income or employment.
Bank statements are mandated by organizations because they give an overview of a person’s spending habits, investments, and to serve as identity proof. Since bank statements contain personally identifiable information, they are considered a valid document for identity verification and used in conjunction with many national documents.
Benefits of bank statements
Electronic bank statements are sent to account holders by banks at the end of every month via email. Bank statements are used to show account activity and ensure there are no mismatches in credit and debit amounts in accounts.
Here is a list of benefits offered to account holders who choose to view their bank statements online:
1. Avoids financial frauds
Bank statements print withdrawal and deposit amounts that an account processes every month. Intelligent document processing solutions used by banks list financials on these records which help users identify if there are any mismatches or discrepancies in amounts. You can compare the transactions recorded by the bank to your own personal records and use them to spot financial frauds. If there are no mismatches, then the records are accurate and validated.
2. Reduces accounting errors
Manual data entry of financials is prone to human error and electronic bank statements have been shown to be more reliable in this regard. Automated bank extract statement solutions are used by organizations to extract financials automatically, validate, verify, and input them in records. This means users don’t have to worry about mistyped amounts, missing values, or accounting errors as the entire process of extracting data from bank statements, reading and recording transactions is automated. Document AI software used by several banks for this purpose, that are also fast, accurate, and reliable.
3. Shows account balances, penalties, and settlements
One of the major advantages of reviewing bank statements is that users get a complete list of their transactions. Users can review account balances, penalties, charges, and settlements, individuals learn how their money is flowing in and out of their account. Account holders aren’t taken by surprise of hidden charges and are made aware of unauthorized transactions. This makes managing their accounts much easier and hassle-free.
Frequently asked questions about bank statements
i) Does my bank statement contain any sensitive information?
The top of your bank statement contains sensitive information such as the bank account number and branch name. All bank statements have a summary table in them that lists opening balances, withdrawals, deposits, time periods, and closing balances.
ii) Can anyone see my bank statement?
Banks never divulge your statements to unauthorized individuals or third parties. The only view someone can view your bank statements online is if they have access to your account details, credit/debit card number, net banking details, and PIN number.
iii) How often should I check my bank statement?
Some individuals prefer checking their bank statements once a month if everything is in order. However, to maintain a good awareness of your financials and spending habits, it is recommended to check your bank statements at least once a week.