March 4, 2019 | Money Management

Why It Is Essential to Review Your Monthly Financial Statements and Annual Credit Report

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Why It Is Essential to Review Your Monthly Financial Statements and Annual Credit Report

Quorum

Mar 04 2019, 01:42pm


Do your monthly financial account statements end up tucked away in the dark recesses of your home office or filed away in an obscure folder in your email? If so, you may miss out on valuable opportunities to review them for accuracy and, perhaps, catch critical errors in the process. Detecting and correcting these errors may not only you save money, but also help protect your financial well-being and credit score.

Start by Keeping Your Statements Organized

Use a calendar, a spreadsheet or even a simple Word document to track the arrival of various financial statements for your accounts including:

Once you’ve compiled a list of statements you expect to receive on a monthly, quarterly and/or annual basis, you’ll need a system to keep them organized. If you receive your statement electronically, be sure you’re familiar with your financial provider’s policy, and how you can access older statements, should the need arise. If you receive them via mail, be sure you know when they arrive for security/identity theft reasons.

Regardless of format, you’ll need to designate a system to file and organize them. Keeping these records organized is extremely useful when you apply for a loan, undergo an audit or prepare your annual tax returns.

Watch for Commonly Encountered Errors on Financial Statements

Once you’ve collected all of your financial statements and set up a system to keep them organized, you’ll need to devote a few minutes each month to review them for errors, including:

  • Erroneous charges: Does your statement list account transactions such as purchases, cash withdrawals or payments with checks which you never made? Did a vendor charge you twice for the same product or service or did a refund fail to credit to your account? Did a restaurant charge you the wrong tip? If so, your monthly account statement is one of the best ways to identify and remedy these errors. Highlight the mistake on your statement and then begin the process of refuting a transaction directly with the vendor or with your financial institution.
  • Incorrect Annual Percentage Rates (APRs): When you opened a credit card account or secured a loan for a home or vehicle, you agreed to payment terms including an APR, or the amount of interest the financial institution will charge you on your balance. Does the APR on your statement differ from the APR you agreed to pay? If so, contact the financial institution right away to correct the issue. If left unaddressed, even a small error in APR calculations could cost you significantly over time. 
  • Introductory rate expiration error: Some financial institutions offer special introductory interest rates for a specified period on new credit card accounts, balance transfers, loans and more. Be sure to check your statements carefully for the date the introductory rate expires. 
  • Missing payments: Are your recent payments to a loan or credit card account missing from your statement? If so, you may incur late charges or other penalty fees from a financial institution which either did not receive your payment or did not process it correctly. Late or missing payments may also significantly impact your credit score.
  • Errors in deposit amounts: Also be sure to check the dollar amount of all deposits to your accounts. Financial institutions are not immune from making mistakes such as incorrectly inputting your $1000 check as a $100 deposit.

Review Your Statements and Protect Your Credit Score

The errors above not only have the potential to create financial headaches for you in the short term but, if left unaddressed, may lead to long-term effects on your overall credit score. Maintaining a healthy credit score, generally at a score of 700 or above, is vital to help you:

  • Secure competitive rates on auto, home or personal loans
  • Lower monthly finance charges on credit card balances
  • Detect signs of identity theft early in the process
  • Attain approval for a higher loan or credit card limits
  • Avoid security deposits on utilities
  • Lower car insurance rates and more

Be sure to take advantage of your free annual credit report. Similar to your accounts statements, you’ll want to look it over in detail to ensure that your financial information is accurate and up to date.

Next time you receive account statements, resist the urge to shove them into a drawer, or delete them from your inbox. Instead, pencil some time into your busy schedule to review them, and potentially find and fix errors which could affect your financial well-being.

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