Account History

What Is an Account History?

An account history is a recording of all the activity that takes place within an account, usually since inception. In a bank account, the account history includes all transactions initiated by the account holder, which would include all credits and debits, as well as passive entries, such as interest on balances, which are credited to the account. The account history is also called a "ledger," depending on where the account is held.

Understanding an Account History

As an account history shows the complete movement of cash in and out of an account, it is an important tool in many ways. Primarily, it helps keep track of where money is being spent as well as where money is coming in from. An analysis of an individual's account history allows them to reconcile inflows and outflows and balance their account.

Account histories can also be a very important tool for credit card companies as it helps them to identify fraud or identity theft, particularly when transactions are out of the ordinary in terms of their amount or place of purchase.

The Internal Revenue Service (IRS) can also look at an individual's account history if they have legal permission to do so, to investigate any illegal activities, such as tax evasion or money laundering. Many financial crimes can be resolved by a thorough analysis of an account history.

The account history is recorded on the account statement, which is an important document to retain and can be accessed online through most bank client portals. Most checking, savings, and brokerage accounts will send a monthly statement to account holders as well, which would include the account history for that month.

Uses of an Account History

Financial Fraud or Error

An account history may be referred to when a record of transactions by an individual or organization is needed to answer questions about questionable transactions. This may be particularly useful if, in addition to cases of fraud, other suspicious behavior is suspected. Though irregular transactions in an account history can indicate fraud they can simply also just be an error.

For example, if an individual has accepted or transferred ill-gotten funds into their bank account, the transaction will be recorded. Likewise, if the assets and funds of an organization do not match their expected levels, the account history can provide a financial roadmap. This can reveal who accessed the account and instituted the transaction and if it is in fact fraud or an error. In instances of embezzlement of corporate funds, an account history can be a tool for identifying the problem and those who are responsible for it.

Purchase Habits

Reviewing an account history can establish patterns of income and expenses over the given period. This information can be used to create a budget or other financial operating plans with the account history supporting the projections outlined in those frameworks, and therefore could possibly lead to savings down the road.

An account history can also be used to discern recurring purchase habits, such as how often a credit or debit card is tendered at the supermarket to pay for groceries. Such an assessment could be used to anticipate when an individual might next need to go shopping to restock.

Business Use

Not all account histories are specifically tied to financial institutions but do represent transactions between parties. For instance, retailers, especially e-commerce businesses, may maintain account histories of their customers’ shopping activity. With that information, the retailer might recommend comparable items they believe would be of interest to the customer or to remind a customer to reorder an item as it may be running low.