Understanding your bank statement

Your personal information

This is your name and permanent home address.  Make sure it’s right, and that you haven’t got someone else’s bank statement! It’s really important to tell your bank if you move house, so they can safely and securely send any information about your account to you.

Your account information

This will show the name you used to open your account with (’account name’), such as ‘Mr John Smith’. It will also show your account number and sort code. Your sort code is a six-digit number with dashes in (for example, 53-61-33) that helps the whole banking system identify which bank and local branch your account’s based at.

Statement summary

You’ll be shown a basic account summary, which will usually show the total amounts paid in and out during that month (or other period if it’s a savings account).  You can also see here that there’s a closing balance – this means the balance of your account at the time the statement was sent out.

Monthly incomings and outgoings

On your statement there will be two columns showing money paid into your account (credits) and one for money paid out (debits).  Your statement will be ordered by date, so it’ll show the oldest payments at the top, working down to the most recent.  Next to each payment is also a description, which shows where you were when you made the payment (a shop or cash machine) or who you paid. There might also be standing orders or direct debits you’ve arranged. This information should also be available for the ‘money in’ section – it might say ‘bank transfer’ for your wages, ‘counter credit’ for cash or cheques you’ve paid in at your branch, refunds from shops, or automated payments made by the state to you, such as benefits.

Sometimes payments will show up on your statement a few days after you actually made them. For example, if you buy something with your debit card in a shop (or withdraw cash from a machine), it might not show up on your statement for a few days. This is because it takes time for payments to go through the banking system, especially over a weekend. When this happens, the actual date you made the purchase or cash withdrawal should be shown in the ‘description’ column.

In the far right column, you can see a running total, the ‘balance’. This means the total you have in your account each day, as a result of money in and out of your account.

Going overdrawn

In your balance column, sometimes you’ll see the letters OD or a minus sign next to the figure. This means your account’s gone overdrawn and you’ve spent more money than you had in your account. So, if you had £10.00 in your account, but buy something on your debit card for £15.00, you’ll go overdrawn by £5 (£10-£15=-£5). You’ll have to pay this back to the bank, along with any interest and charges – unless you have an interest-free overdraft.  The longer you leave it to pay pack your overdraft, the longer you’ll be charged interest on it, and the harder you may find it to get out of your overdraft.

That’s why it’s really important not to become reliant on your overdraft – it costs you more money in the long-term to borrow from the bank like this. It’s a good idea to do all you can to stay in ‘the black’ (plus numbers) and get out of ‘the red’ (minus numbers). It could be a spiral into debt, so make sure you’re not always right at the limit of your overdraft.

Bank charges

If your account’s gone overdrawn beyond your agreed limit, or you didn’t have an agreed overdraft, the bank will charge you for ‘unarranged borrowing’.  They can also charge you if you pay in a cheque that bounces (that’s when the other person doesn’t have enough in their account to cover the amount they wrote the cheque for). Banks have to notify you before they take any money from your account for these charges.