UAE: What to look out for in your monthly bank statements
Tracking your monthly statements is vital especially during the COVID-19 pandemic
A bank statement is a document that shows how much money was credited to and debited from a bank account over the period of a month or quarter. It’s a snapshot of your banking activity and a useful tool for understanding your finances.
Taking the time to review your statement means you can catch issues that might otherwise go unnoticed, such as hidden charges. Find out how to read a bank statement and why you should review yours every month.
What is on a bank statement?
Although you will see some differences in layout between different banks, most bank statements include the following information:
- Account activity: This section details all of the transactions made during the statement period, such as purchases, deposits and withdrawals, in chronological order
- Account balance: This is the amount of money in the account on the closing date
- Account number: This identifies the bank account
- Account summary: This provides an overview of the account, including the opening and ending balances, deposits, withdrawals and fees
- Account type: This identifies the type of account, such as salary or current, savings or investment
- Bank contact information: This includes the mailing address, phone numbers and website details for the bank’s customer service department
- Credits: This is the money credited to the account during the statement period
- Debits: This is the money removed from the account during the statement period, such as debit card purchases, checks and bill payments
- Statement date: The date that marks the end of the statement period is typically located at the top of the document
- Total fees: These are the fees charged to the account during the statement period
- Transaction date: This is the date when the transaction was processed
- Your contact information: Make sure to check that the details to contact you are correct, to report any errors to the bank
How to reconcile your bank statement?
Reconciling your bank statement serves several purposes. First, it helps you verify all of your bank transactions, ensuring there are no mistakes. It’s also a time to make sure you didn’t miss a payment or pay someone twice. And you can track any uncashed checks or bounced payments from the previous month.
Reconciling your statement also gives you an insight into your finances and how you spend your money. This can lead to better money management, especially at a time of when the crisis has hit personal finances and expenses.
Here are some quick and brief tips to follow when you are reconciling your bank statement:
- Check your bank statement against other records: This can be a written log and receipts, budgeting software or an app.
- Check the balance: Make sure the starting balance on your bank statement matches your records. If not, find out why and correct the issue.
- Check deposits: Review the deposits listed on your bank statement to ensure they match up to your records
- Check withdrawals: Check your withdrawals in the same manner you checked deposits.
- Reconcile your accounts: If something doesn’t add up, work to fix the issue by adjusting your own records or by working to correct bank errors. The goal is for the ending balance on your statement to match your records each month.
How to find and correct mistakes on your bank statement
It may not happen often, but finding a mistake on your bank statement can be frustrating, especially if you are diligent in reconciling your account. If you do come across a mistake, work quickly to fix the matter with your bank.
Here are some steps to take to correct errors on a bank statement:
Verify the mistake: If you come across a mistake, take time to verify that it’s actually a mistake. Set aside any evidence of the error if possible. You’ll need it when you reach out to your bank.
Contact your bank: Contact your bank to inform them about the error. Depending on the financial institution, you may do this by calling the bank’s customer service department, sending a secure message through your online bank account or by email. Send any proof of the mistake at this time. If contacting your bank by phone, let them know you have evidence of the error and ask them the best way to send it.
Contact the third party: If the error involves another party, take time to inform them of the mistake, in case it affects records on their end as well. They may be able to help resolve the error faster than you can on your own, or if you approach your bank.
Adjust your records: Once the error is corrected, make the necessary adjustments in your own records. It’s a good idea to keep records of your correspondence with your bank or third party, in case any issues arise later. Keep the names of people you speak with, along with the date and time.
Why is it important to read your bank statement?
Your bank statement offers insight into your financial habits. It allows you to discover where your money goes and where you might be able to save money. Your bank statement also provides details about any fees you’ve been charged and allows you to investigate accounting errors and fraudulent charges. Learning how to read your bank statement is not as difficult as you may think. Once you know what you are looking for, you will feel much better about your finances.
How often to check your bank accounts?
If you're wondering how often you should monitor your checking account, know that it's impossible to check your bank account too often. Some people feel that checking their bank account once per month is enough, but financial planners suggest that monthly check-ins aren't really enough to keep you conscious of your spending or help you catch fraud in a timely manner. It's better to check your bank accounts at least once each week.
If you live paycheque to paycheque, or in other words using most or all of your monthly income is used to cover your monthly expenses — with no money left over and none for savings, or if you are trying to rein in your spending, you'll want to check your accounts even more frequently. This is also true for those who receive irregular income from multiple sources, (such as freelancers or the self-employed), who might need to monitor their income more closely. Matter experts continue to recommend that checking your bank accounts be made ideally a daily or at the most a weekly habit.
Summary of tips to follow
Here’s a summarised step-by-step tip-sheet on reading your bank statement without overlooking any major charge:
• Start with the account summary: Somewhere near the top of your statement there will probably be an area that provides an overview of the past month’s activity. This includes the opening balance, closing balance, deposits, withdrawals, checks, and fees. A quick glance at this will give you a great idea of what you did during the past month, and whether or not there are any issues you may need to look into.
• Knowing the type of statement you are looking at: While the format may be the same, the information on a salary or current account bank statement will be much different than that of a savings account. For instance, your current account probably has a lot more money coming in and out, especially in the form of salaries. On the other hand, your savings account is probably where you store money that you don’t want to spend. On a savings statement, make sure you hunt down the line that shows how much interest you earned. Even if only a little bit of money, you want to be sure of how much you are earning.
• Keep an eye out for common bank charges: The aim is to find charges that you may be able to avoid in the future. For instance, some banks impose monthly service charges if a certain amount of money is not kept in the account. If you are not reviewing each and every statement, you may make a mistake that leads to one of these charges repeatedly. Keep an eye out for overdraft fines, money transfer fees, ATM fees or minimum account charges
• Look for errors or potential clarifications: Although you may not find them very often, mistakes do happen from time to time. It is essential that you comb through each and every detail of your bank statement, looking for errors. You never know when you will get charged for something you didn’t purchase, or get hit with a fee that is not fair. If you don’t catch this on your bank statement, chances are that it will go unnoticed. If you find a fee that you think is unwarranted, be sure to call up the customer service line and ask that it be removed from your account.
• Detect spending patterns or money habits: Since your bank statement includes every transaction that was made, it is simple to see where your money is going and whether or not you are making good decisions. This allows you to pinpoint problems such as spending a lot at the beginning of the month, but running out towards the end. Patterns like this should help you better budget your money. It should also show you how often you took a trip to buy coffee, ordered food from outside, or bought clothing. Use your bank statement as a means to identify expenses in your life that you need to cut back on.
Also it is often advised that ideally, one needs to compare three consecutive bank statements to see if there is a pattern, or if one month was just a fluke. Also, a lot of these same rules apply for analysing a credit card statement if you happen to have a credit card.