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Your Bank Statement Deserves Your Attention

Ellen Chang

Maybe you don't balance your checkbook or even receive a monthly report on your checking or savings account in the mail, but you still need to be regularly looking over your bank statements.

Checking your statement or transactions will alert you to any potential fraud quickly, such as a hacker using your debit card to pay for purchases.

You might receive text alerts or emails from your bank or credit union whenever you make a transaction over a certain amount, such as $20, but reviewing all the transactions each month can show you how much your total spending is, including paying monthly bills such as your rent or mortgage, auto loan and student loan.

If you frequently make purchases using your debit card, reviewing all the transactions is a good idea to make sure you were charged the right amount. This should be a higher priority if you have traveled recently and used your debit card to pay for hotels, airline tickets, food and other items.

[Read: Best Checking Accounts.]

What Is a Bank Statement?

A bank statement is a record of transactions associated with an account during a specific period of time, says Bruce McClary, spokesperson for the National Foundation for Credit Counseling, a Washington, D.C.-based nonprofit organization.

"The activity commonly featured on a bank statement includes account deposits, withdrawals, earned interest and fees," he says. "Accounts linked to a debit card will also feature point-of-sale transactions and ATM withdrawals on bank statements."

A bank statement will also include any fees charged that month and the interest accrued for savings and money market accounts and certificates of deposit.

Statements are also helpful for other things such as determining proof for payments and donations when you file your state and federal income taxes, says Jeff Rose, a Nashville, Tennessee-based certified financial planner and creator of the Good Financial Cents blog.

[Read: Best Savings Accounts.]

How Do You Get a Bank Statement?

While many banks still mail monthly statements to account holders, consumers may choose to have them delivered electronically, either for convenience or to avoid fraud.

Even if you still receive paper statements, you should consider scanning them and saving only the electronic version, says Jackie Boies, a senior director of housing and bankruptcy services for Money Management International, a Sugar Land, Texas-based nonprofit debt counseling organization.

And if you opt for electronic statements, your bank may offer the option to export statements to a downloadable spreadsheet, while others will allow account activity records to be downloaded as a PDF, McClary says.

Plus, your bank likely offers access to your account history going back several years -- Chase and Citibank, for example, make seven years' worth available -- and you could maintain your own digital version.

Rose says, "Personally, I keep electronic statements by simply downloading them and storing them in both an encrypted online vault and an external hard drive."

Also, if you're relying on a bank to provide past statements, you may need to pay a fee to the institution.

[Read: Best CD Rates.]

How Long Should You Keep Your Bank Statements?

Keeping a bank statement may be necessary to track payments for tax purposes, show proof of income when you are applying for a loan or ensure no fraud has occurred.

Since IRS audits typically go back three to six years, consumers should have access to statements for at least that long. And if you are making monthly bank transfers to a former spouse for child support or alimony, you might want to keep records even longer in case of any disputes.

A bank statement is also helpful if you discover fraud.

Katie Miller, senior vice president of savings products at Navy Federal Credit Union in Vienna, Virginia, says, "It is not uncommon for a consumer to suddenly notice an unauthorized charge by a merchant and discover it has been going on for months through their bank statements."

Reviewing your statements can also help you budget and understand your spending and savings patterns, especially if you are trying to reduce costs, she says.

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