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Understanding Bank Statements

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by

Basam Diablos

on 5 September 2016

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Transcript of Understanding Bank Statements

Understanding Bank Statements
Bank statements always have your name and address. This makes them pretty handy as ways to prove your ID - a lot of places ask for bank statements or bills when you're entering a contract - but is also a risk. You should keep your bank statements safe in case someone tries to steal your identity.
This is your bank account number and sort code. The sort code is the reference for your exact bank and branch, and the account number is unique to you. Other people may have the same sort code as you, but no-one will ever have the same account number.
You need to keep these very safe, as if these numbers are stolen by someone, they can use it to commit fraud. This could leave you in a lot of debt through no fault of your own!
Here are all Mr Griffin's regular bills. He pays them by Direct Debit, and they all happen at the start of the month soon after he's been paid. He's also timed his loan repayments and a Nationwide payment (possibly an insurance?) to also come out during this period.
Even worse, there are a couple of final direct debits to pay at the end of the month, just before Mr Griffin gets paid. This sends him even further into his overdraft.
Looking back at the summary we saw at the beginning, we can now see why Mr Griffin went overdrawn; if he had timed
all
his bills, including rent and TV license for the period just after he was paid, he would have had a better idea of his financial situation and may not have used his debit card quite so freely at the end of the month.
Bank statements tend to have handy summaries like this at the top. At a glance, you can see that Mr Griffin has spent more than he earned, and so has ended up in his overdraft.
A BACS is an automated payment from an employer. In this case, Mr Griffin works for the council and got paid £850 (after all his deductions).
We're now reaching the later part of the month, and Mr Griffin is still spending quite freely on his debit card. He's still in credit though: he hasn't spent more than he's earned so far.
Unfortunately Mr Griffin's rent comes out by Standing Order at the end of the month; he has paid Thomas Elliott Letting Agents £450 and this sudden cost has sent him overdrawn, or 'into the red'.
This is an example bank statement, made especially for this exercise. Let's go through it step-by-step and see what it means.
At this point, Mr Griffin is now spending on his debit card (DC) and also using cash machines (ATMs). However, note that he also has been paid again: he probably has a part-time job.
Bank statements tend to be every month or so. The date period they cover is on the statement: the example here is very neat and tidy, but most statements start and end in the middle of the month.
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