Assuming you haven't gone paperless, the amount of credit card statements you get in the mail every month might feel overwhelming. But it's important not to throw them in the trash immediately. You should keep them on file, but for how long? Here's how long you should keep your credit card statements and why you should keep them.
How Long Should You Keep Credit Card Statements?
While it's important to hold on to your credit card statements, you don't have to keep them on file indefinitely. Most experts recommend keeping your credit card statements for 60 days. Exactly how long you should keep your credit card statements depends on a few different factors.
Your Credit Card's Billing Policies
The standard 60 days should give you ample time to identify any errors on your statement and have them corrected. Most credit cards can't be held accountable for false charges after 60 days, but it's important to be familiar with your credit cards' specific policies. Some credit cards have an extended warranty that can range from 90 days to one year. If that is the case, keep your statements on file for as long as that specific credit card policy dictates.
If your credit card statements contain tax-related purchases, you should keep them on file for up to six years. Examples of these types of charges might include personal business expenses or donations to charity. This allows you or your tax preparer to incorporate these documents into your tax write-offs for the year. Having them on file for multiple years will allow you to have supporting documentation in case you get audited by the IRS.
Your Financial Goals
If you want to create a budget, you may also want to hold on to your credit card statements for at least a few months. This will allow you to track and categorize your expenses over a long period of time, giving you the opportunity to see what your spending habits are like and adjust accordingly.
Why Keep Your Credit Card Statements?
There are a variety of different (and important) reasons to keep your credit card statements. One of the top reasons to keep the statements is for monitoring your credit card activity. This allows you to easily go through your list of transactions and identify charges made in error or fraudulent charges. If you own your own business, work as an independent contractor, or regularly put business expenses on your credit card, you may also want to keep your credit card statements on file for tax purposes.
Don't like the clutter created by holding on to your credit card statements? Even if you don't keep your physical paper statements, it's important to have your digital statements on file. Your bank will store them in your online account. However, having physical statements on file can make it a lot easier to reference them in a hurry. There is also no guarantee that your credit card issuer will keep your statements archived in an easily accessible location.
Best Way to Get Rid of Credit Card Statements
Credit card statements contain sensitive information that can leave you open to identity theft or fraud. It is important to carefully dispose of your credit card statements, rather than simply throwing them in the trash.
It may seem outlandish, but some people -- especially identity thieves -- do go through other people's trash. In fact, in 1988, the US Supreme Court ruled trash-picking legal once it is off private property. This leaves your credit card statement prone to being taken advantage of once it's thrown away.
Be sure to put your statements through a shredder before throwing them away. Shredders are the best choice because they finely tear up the statements to the point where they are impossible to read or put back together. If you don't have a shredder at home, you can easily find a cheap trash can attachment on Amazon (AMZN - Get Report) or your local office supply store. In the meantime, tear up your statements into small pieces by hand before throwing them in the trash.
What Other Financial Documents Should You Keep?
Credit card statements aren't the only financial documents that you should consider keeping. There are a few others that may be able to help you as well.
Credit Card Receipts
While it can seem like a lot of extra paperwork to keep around, holding on to receipts from purchases made on your credit card can be useful. Receipts make it much easier to prove if a transaction has posted to your credit card statement incorrectly. Once you verify that a transaction appears on your statement correctly, you can dispose of the receipt.
You should be keeping your bank statements for up to one year. One of the main reasons to hold on to your bank statements is to check them for accuracy. If you receive payment from work through a direct deposit, it's important to consistently check your bank statements and ensure that the correct amount is depositing into your account.
It's important to keep your mortgage statements on file for the entire life of the loan at minimum. In some cases, it may be wise to keep them for up to seven years after the loan is paid off. Most financial experts recommend keeping a payoff statement forever.
The IRS recommends keeping your tax returns on file for at least three years. In some situations, such as failing to report your income properly, they may recommend keeping them on file for up to six years. You may need your returns to help you fill out future returns and track depreciation or depletion of property.