What Is an Account Statement?
An account statement is a periodic summary of account activity with a beginning date and an ending date. The most commonly known are checking account statements, usually provided monthly, and brokerage account statements, which are provided monthly or quarterly. Monthly credit card bills are also considered account statements.
Key Takeaways
- An account statement is a periodic statement summarizing account activity over a set period of time.
- Account statements can be thought of as a summary of the account and include statements of services provided, fees charged, and money owed.
- Account statements should be scrutinized for accuracy, and historical statements are critical for budgeting.
- Account statements may often be received electronically, as distributors may charge fees for paper copies.
- Account statements usually contain a unique identifier, starting information, ending information, and transactions.
Understanding Account Statements
Account statements refer to almost any official summary of an account, wherever the account is held. Insurance companies may provide account statements summarizing paid-in cash values, for example. Statements can be generated for almost any type of accounts that represent ongoing transactions where funds are repeatedly exchanged. This can include online payment accounts such as PayPal, credit card accounts, brokerage accounts, and savings accounts.
Utility companies, as well as telephone and subscription television service providers, usually generate account statements for their customers detailing their usage and any overages during the payment cycle. Such statements typically list debits paid, incoming funds or credits received by the account holder, and fees associated with maintaining the account. For example, certain types of savings accounts might incur regular maintenancefees unless a certain minimum balance of funds is maintained in the account. Cable television subscriptions may include state taxes and other surcharges that are included in providing regular service.
Account statements don't necessarily need to be financial. Consider an account statement that tracks a company's environmental impact from one period to the next.
Elements of Account Statements
Though account statements may vary based on the issuer and underlying service, you may come across the same elements across statements. These elements may include but aren't limited to:
- A Unique Identifier. Account statements are often tied to a unique identifier such as an account number or bank account number. The statement may only display part of the account number for security reasons.
- Personal Information. Your account information, including your account number, the name of the account holder, and any contact information that is associated with the account, will typically be displayed on the statement.
- A Start Date and/or End Date. This is the timeframe that is covered by the statement, such as a particular month or a quarter. It can also be referred to as the statement period.
- Opening and Closing Balances: Both the opening and closing balances of your account will be displayed on the statement that is sent to you at the end of the billing cycle.
- Transactions: The transaction history is a comprehensive description of all of the activities that took place on the account during the billing cycle. This includes all deposits, withdrawals, purchases, payments, and other types of account activity. Typically, the date, a brief description, and the total amount are recorded next to each transaction.
- Fees and Service Charges: The statement may list any fees or service charges that are associated with your account, such as monthly maintenance fees, ATM fees, or overdraft costs. In some contexts, this account statement may be the only instance in which the fees are communicated to the account holder.
- Information About Entity: The statement issuer could send you crucial messages or notifications regarding your account, forthcoming changes to the business, or promotional offers.
How Account Statements Are Used
Account statements should be scrutinized for accuracy, and historical statements are critical for budgeting. A credit or loan account statement, for example, may show not only the outstanding balance due but the interest rate charged on that debt and any fees that have been added during the payment cycle. This can include late charges for payments not received by their due date as well as overdraft fees when bank account holders overspend. Your account statements are a window into your finances.
The statement may also list financial information that relates to the account holder such as their credit score, or the estimated time it will take to completely pay off a debt via installment payments. Alerts and notices to the account holder may also appear on these statements, calling attention to matters with the account that need to be addressed, such unusual charges that should be reviewed and verified.
Account statements are often recurring and should arrive at a set cadence. Contact your account administrator to best understand when statement periods occur and when you may expect statements.
Red Flags on Account Statements
Anomalous items on an account statement may be a sign the account has been compromised, perhaps through a stolen credit or debit card or through identity thieves who gained access to account information. For example, an account holder or the financial institution might spot a charge for concert tickets or a luxury item that seems out of the ordinary.
Account holders may be able to dispute such out-of-place charges and file a claim that they did not make the purchase themselves. Reviewing your account statements as they come in is a good financial habit that can catch these red flags before they become a financial disaster.
Electronic Statements vs. Paper Statements
Account statements may be delivered electronically or via paper. Electronic account statements are delivered digitally in formats like PDF, HTML, or through online portals. They offer convenience, reduce impacts to the environmental, and can often be easily stored.
The primary aim of electronic statements is to reduce paper usage, save space, and reduce the risk of unauthorized access compared to paper statements. Electronic statements may be password-protected and delivered through secure channels, reducing the risk of theft or interception. Electronic statements may also be more easily shared by other individuals needed copies
Paper account statements are printed on paper and sent via postal mail to the account holder's physical address. Proper disposal of paper statements is crucial to protect sensitive information and prevent unauthorized access to personal financial information.
Paper statements do not require an internet connection or electronic device to access. This can be beneficial for individuals in areas with limited connectivity or those who prefer to review their financial information offline. In case of technical issues or loss of access to electronic records (both temporarily or permanently), individuals can rely on their paper statements as a secondary source of information.
What Should I Do If I Notice an Error or Discrepancy on My Account Statement?
If you notice an error or discrepancy on your account statement, contact your bank immediately. Provide them with the details of the incorrect transaction, and they will initiate an investigation to rectify the issue and ensure your account is accurate.
How Long Should I Keep My Account Statements?
The recommended duration for keeping account statements varies, but it's generally advised to retain them for a minimum of one to three years. However, consult with a financial advisor if you're unsure what account information should be retained especially related to tax statements, investment statements, or banking statements.
Are There Any Fees Associated with Receiving Paper Account Statements?
Some financial institutions may charge fees for providing paper account statements. Electronic statements are often offered as a free alternative or may have lower associated costs. Check with your bank for their specific fee structure and any incentives for switching to electronic statements.
How Can I Use My Account Statements for Budgeting and Financial Planning?
Account statements can be used for budgeting and financial planning by analyzing income, expenses, and patterns of spending. Review your statements to track where your money goes, identify areas for potential savings, and make informed decisions about budget adjustments or financial goals.
The Bottom Line
Account statements provide a comprehensive overview of transactions, balances, and activities in a bank, financial, or other account. They include details such as deposits, withdrawals, interest earned, fees charged, and the current balance (if applicable). Account holders can access statements electronically or in paper format, and they play a crucial role in tracking finances, reconciling records, identifying errors, and aiding in budgeting and financial planning.
