What is an account statement?
An account statement is a periodic summary of account activity with a start date and an end date. The best known are current account statements, which are generally provided monthly, and brokerage account statements, which are provided monthly or quarterly. Monthly credit card bills are also considered account statements.
Key points to remember
- An account statement is a periodic statement summarizing the activity of the account over a defined period of time.
- Account statements can be viewed as an account summary and include statements of services provided, fees charged, and money owed.
- The accuracy of account statements should be checked and historical statements are essential for budgeting.
Understanding account statements
Account statements refer to almost any official summary of an account, wherever it is held. Insurance companies can provide account statements summarizing cash values paid, for example. Statements can be generated for almost all types of accounts that represent pending transactions where funds are exchanged repeatedly. This can include online payment accounts such as PayPal, credit card accounts, brokerage accounts, and savings accounts.
Utility companies, as well as subscription telephone and television service providers, typically generate account statements for their customers detailing their usage and any overruns during the payment cycle. These statements generally list the debits paid, the funds or credits received by the account holder and the fees associated with managing the account. For example, certain types of savings accounts may incur regular maintenance fees unless a certain minimum fund balance is maintained in the account. Cable television subscriptions may include state taxes and other surcharges which are included in the provision of regular service.
How account statements are used
The accuracy of account statements should be checked and historical statements are essential for budgeting. A credit or loan statement, for example, can show not only the outstanding balance, but the interest rate applied to that debt and any fees that have been added during the payment cycle. This can include late fees for payments not received by their due dates as well as overdraft fees when bank account holders spend too much. Your account statements are a window to your finances.
The statement may also list financial information about the account holder, such as their credit rating or the estimated time it will take to fully repay a debt through installments. Alerts and notifications to the account holder may also appear on these statements, drawing attention to account issues that need to be addressed, such as unusual charges that need to be reviewed and verified.
Red flags on account statements
Abnormal items on an account statement can be a sign that the account has been compromised, perhaps by a stolen credit or debit card, or by identity thieves who have had access to account information. For example, an account holder or financial institution may spot fees for concert tickets or a luxury item that seems out of the ordinary. Account holders may be able to dispute these charges outside of the venue and file a claim that they did not make the purchase themselves. Examining your account statements as they arrive is a good financial habit that can catch these red flags before they become a financial disaster.