Anatomy of a checking statement
You've committed to
watching your checking account more closely. So where do you start?
By getting to know your monthly account statement.
While each checking statement can vary according to
the specific kind of account and your bank, there are some basic
entries to keep an eye on. Unusual transactions in any of them can
be a red flag alerting you to account trouble.
Get an overview
When your statement arrives, start by perusing the summary.
It's usually listed at the top of the first statement page and condenses
the state of your account: balance (previous and current), deposits,
checks, service charges, etc.
This section will give you a good idea of whether
venturing further into your account is going to be a walk in the
park or a walk on the wild side. For example, if you think you have
around $800 in your account and the summary shows there's only $256,
you've got a problem.
The reason for the discrepancy between your records
and the bank's -- maybe that $400 deposit hasn't cleared or the
bank really did make an error -- should be detailed further along
in the statement. The summary will at least warn you to pay close
attention as you read on.
Know your account type
Do you know what type of account you have? Make sure the
bank does, too. Each statement should prominently display the type
of account you hold.
You can have an interest-bearing checking account
(great, you're earning interest on your balance), but that may also
mean you have to keep a minimum balance. Or, you can have a pure-vanilla
checking account, where there are no charges and no minimum balance,
but you earn zero interest on your deposits.
By knowing what kind of account you have -- and making
sure it's reflected properly on your monthly statement -- you'll
know what else to look for. For example, if the bank unilaterally
decides to upgrade you to a preferred status, your statement can
alert you to that before you get in trouble for failing to keep
the minimum balance. Similarly, you'll need to watch for account
charges if the bank decides to alter its requirements for your particular
type of checking account.
Find the fees
Make note of all fees listed on your bank statement. These
may be listed separately, or included in the chronology of your
account's monthly activity.
Common ones are an account maintenance charge (that
is, a fee you pay simply for having the account) or NSF, which shows
up if you didn't have sufficient funds to cover a check. If there's
a miscellaneous charge for $10, check the statement for details.
If it's not explained in the statement, call your branch to find
out exactly why you're paying.
By tracking fees, you'll discover whether your bank
is "nickel and diming" you with charges. If that's the
case, your monthly statement can give you a head start in a search
for a more cost-effective home for your checking account.
Watch how your checks are
Does your statement list checks chronologically or by date
paid or by both? Make sure you understand how your checks are listed
so you won't have any trouble reconciling your account. Ideally,
the bank will list canceled checks in a way that's convenient for
you and that allows you to quickly see whether your checking account
is in order.
Play the date game: outgoing
Find out how checks are drawn against your account. Some
banks will process the check for the largest amount rather than
the first on the top of the pile. Why? If the bank pays the largest
checks first, the odds increase that you'll run out of money and
the bank stands to make money (see fees above) if you bounce a check.
Also look for the float differential. Float is the
time between when a check is written, submitted by the payee and
when the money is actually taken out of your account. Most statements
show the issue date and payment date; this will give you an idea
of how quickly money is moved out of your checking account.
Play the date game: incoming
Float also comes into play with deposits. Again, look at
the date your statement shows you put a check in the bank when the
full amount was available for your use. Many banks limit total access
to deposited funds, sometimes for as much as a week depending on
the size of the deposit, the type and the institution upon which
Do you see a pattern in how long it takes your checks
and deposits to clear? This is important to know so you can keep
your account balanced.
This pattern also can serve as a guide to the kind
of service you're getting (or not) from your bank. If it seems some
checks are posted sooner than others, or deposits take longer to
register, call your bank for an explanation.
Knowing when your checks are paid and deposits are
available can prevent you from overdrawing your checking account
and facing some of those nasty fees discussed earlier. And it will
help you find an account that works for you, not the bank.
Jenny C. McCune is a contributing
editor based in Montana.