Making sense of your bank statement

Gloria Ebhota, 30, works with a business consulting firm and nurses a big dream. She wants to become a major player in investment.

She has a Masters and intends to pursue a PhD in Investment Banking to support her dream but she has little patience for her Bank Statement which hits her mail on a monthly basis.

“Soon as I see it, I press the delete button. Seriously, what else do they want to say that I don’t know already?” Her friend Akin Joshua who is standing close by claims he doesn’t delete his monthly statements but just as well, is unlikely to open it much less know the content.  Caleb Ndukwe, an auto dealer, admits that any time he receives his statement; he quickly skims to see his total amount. Many people find it tedious, boring or reminders of things they will rather not deal with, so they don’t bother to read their bank account statements.

A bank statement or account statement is defined by the Business Dictionary as a report released (on a fixed date every month) by banks that lists deposits, withdrawals, checks paid, interest earned, and service charges or penalties incurred on an account. A statement shows the cumulative effect of these transactions the account’s balance, up to the date the report was prepared. The CBN mandates that every customer with a current account is entitled to receive a bank statement.

However, many banks in Nigeria are increasingly compiling bank statements for their savings account holders as well.

Unlike other junks in your inbox, a bank statement actually bears relevance to your personal finance and should be treated carefully.  Learning how to read your bank statement is not as difficult as you think. As a matter of fact, learning to read it will help you become better at money management and prevent unnecessary financial pitfalls says a top management banking source that chose to remain anonymous.

You can achieve this for instance, he explains, by comparing your expenses for the current month with the previous month. Observe the difference in your spending, it might lead you to making some important financial adjustments and save some money in the coming month.

Keep your eyes open for some bank charges that are avoidable.

For instance, the CBN rules on ATM withdrawals mandate a N65 withdrawal after the fourth from another bank where your account is not domiciled.

The amount you are charged on ATM withdrawals in a month depends on the number of times you withdraw outside your bank. You may want to avoid these little charges by planning and restricting your withdrawals to your bank.  On the other hand, you can easily spot illegal ATM deductions that you are not aware of while reading your bank statement.

“Some banks charge you N65 on every withdrawal you do outside bank where account is domiciled which is illegal but if you don’t report it your bank will be making money off you.” 

A careful study of the bank statement might also help you know whether your bank has been faithful to the new guidelines on Charge on Transaction, COT, is higher than industry standards. The mandated charge on Cot according to the Revised Guide to Bank Charges released by the CBN in 2013 is N1.

The new guideline which came into effect in 2015 replaces the 2004 charge at N3. Notwithstanding, many banks still withdraw N3 as COT from their customers.

This usually goes undetected “because a lot of customers are ignorant of the new CBN guideline on COT; when you calculate N3 taken from about a million customers, the bank rakes in profit from their customers.

Only corporate organisations check their bank statements because they have experts who go through them and can spot these illegal charges,” says the source.

When reading your bank statement and you come across some ambiguous charges the law empowers you to call your financial officer and demand an explanation, “the bank holds a fiduciary responsibility to its customers”.

The CBN’s Bank Customers’ Bill of Rights and Duties guarantees the right of the customer to “efficient complaints management system through which you can lodge complaints against your bank.

You also have the right to be kept abreast of resolution process (acknowledgment, feedback, updates, and explanation) and ultimately, basis of decision. Where you are not satisfied with the decision of the  bank, you have the right of review either by your bank, the CBN or the court.”

According to the source, “many Nigerians don’t report the mistakes. Most of the complaints we get in the bank come from companies and we resolve them immediately. Banks will do everything possible to refund your money once an error or illegality has been confirmed because they are afraid of not only the public exposure and embarrassment but also of the CBN sanctions they are likely to face if they are exposed.”

The length of your bank statement may vary depending on the type of account (current or savings) and the number of activities carried out in the month. Most bank statements however come with the same features.

Opening balance

An opening balance refers to the balance that is brought forward from the end of one accounting period to the beginning of a new accounting period. Essentially it is the “summary of your bank statement.” It is usually found on the credit or debit side of the ledger.

Total credit

Total credit is the sum total of all the money you deposited from the account over a given period.

Total debit

This is the opposite of the total credit. It represents the all money withdrawn from an account over a period. Other features of a bank statement may include dates when transactions were carried out, narration which explains how the activities were undertaken and the person who paid or withdrew the money. It also explains how card transactions like ATM withdrawals were carried out.

It is your duty to read the statement and your right to hold your bank accountable in case of errors.

ONUOHA FRANK