Have a pile of credit card statements? Find out how long you need to keep your old statements and why.
When deciding what financial records to keep and what to throw away, there are several important criteria. Do you use your credit card for business expenses? Do you have any tax deductible purchases? If you answered yes to these questions, you'll need to hold onto your credit card statements for 7 to 10 years.
However, if you only use your credit for normal expenses than you'll only want to keep your paper statements for a year at the most. Most Americans can safely shred their credit card statements after a year.
I suggest you use a separate credit card for business expenses. Then save all the statements from that account for at least 7 to 10 years.
Most banks now offer an electronic delivery (e-delivery) option. The bank emails you when you statement is ready. The statement is then available for download as a PDF document.
You'll want to make sure to log onto your account and download your statement every month. If you're low tech, just print the statement and file it.
I save credit card statements on my computer hard drive. I then back up all of my electronic documents on a regular basis.
Don't Expect Your Bank to Do Your Record Keeping
The bank's document retention policy may be different than what's required for you. The bank may only keep 3 years of statements. So make sure you have your own copies. Also banks have a tendency to get bought by other banks. Who knows if they can even get your statements or if your bank will even exist 5 years from now?
Banks will also charge you a fee to retrieve statements. Save yourself some hassle and some money and make sure you have a copy.
Why Do I Need to Keep Credit Card Statements?
You need to keep credit card statements for a year only to as a short term record of your expenses. If you have any tax related purchases like business expenses, property tax payments, medical expenses, or day care expenses, you'll need to keep the statements for as long as the IRS can contest your tax return.
If you are able to itemize expenses on your taxes, you'll need to keep the supporting documentation of the expenses. Statements from your credit card company will work for that. The IRS has 3 years to audit your return if they suspect errors. The IRS has 6 years to audit your return if they suspect you under reported your income by 25% or more. There is not limit if the IRS suspects fraud.
The Easiest Way to Manage Financial Documents
If you have a computer, try storing everything electronically. That way you can save everything indefinitely, in case you're curious how much your grocery bill was 20 years ago. Also electronic storage takes up no physical space. You wont' have to lug your paper around with your for the rest of your life.
If you do go electronic, make sure you maintain backups of your financial statements. Burn a copy of your documents to DVD and put them in a safe deposit box or just throw them in a drawer at work.
Bankrate.com has a guide for how long to keep financial documents. You may find that useful.Tags Bank Statements Banking & Money Credit Card Statements Credit Cards IRS Tax Return Taxes
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