It seems we always end up with a stack of paper documents lying around. This is still true even with the major shift to mobile and online banking. But how long do we really need to keep those bank statements for? The short answer: you can usually dispose of your bank statements within a year. Sometimes, though, you’ll need to keep them for much longer for tax reasons. Let’s take a look at why you should save some paper documents and how long it makes sense to keep them for.
If you’re looking for financial advice beyond banking, a financial advisor can help you create a financial plan for your needs and goals.
How Long to Keep Bank Statements
If you’re still receiving paper bank statements, you’ll generally want to keep those around for about a year. Banks typically keep statements within the past year pretty accessible online, as well. You might want to contact your bank to double check how far back you can access your statements. You may also be able to access an online archive of statements that goes further back.
As for credit card statements, you only really need to check for inaccuracies before you can throw them out. Be sure to compare each statement against your receipts and to look for any potential fraudulent purchases. You can then safely dispose of your statements once you’ve done a thorough check and are confident they’re accurate.
Once you’ve decided which statements to keep, you should store them in a safe and organized space. It helps to separate your bank statements from credit card statements, receipts, investment statements and other documents. That way, when you do need to reference certain statements or finally throw them out, you’ll know exactly where to find them.
Why Should I Keep My Bank Statements?
Keeping your bank and credit card statements around for a year might seem like unnecessary hoarding. But there are a number of important reasons to hold on to them in an accessible place. For one, investment and banking statements are crucial to filing your taxes correctly as they provide proof of income. You should also save records of any business expenses, mortgage payments, tuition payments, student loans and charitable donation receipts.
It is important to note that the IRS may need you to provide documentation to support your filings for three to seven years after you file a return. This means you may want to save any documents that support the information you filed for at least three years.
Saving your credit card statements is helpful in the event of statement inconsistencies or if you fall victim to fraud. Producing proof of spending will help you file a credit card dispute in case you do find any mistakes in your credit card statements or credit report. Without the correct documents, you may be stuck with a faulty charge on your credit.
What Happens If I Throw Out Bank Statements?
If you were to throw out your bank statements prematurely, the worst case scenario is that you could file an inaccurate tax return. You could also find yourself in a bind should you end up with an IRS audit where you need to produce these documents.
You could set yourself up for identity theft or fraud if you don’t throw out your bank statements properly. Always shred any documents with your personal and financial information before tossing them in the bin. This will prevent fraudsters from easily collecting your information from the trash.
Your best bet is to keep your bank statements around for at least a year. This ensures you can file your next tax return with the most accurate information. If you suspect any information might prove to be useful further out, like for a tax audit, there is no harm in keeping your documents longer. Luckily, nowadays much of this information is online so you don’t necessarily have to deal with a growing pile of papers.
Tips for Banking Responsibly
- Organization, including keeping track of your bank statements, is an important part of managing your finances. But as you keep a paper trail and verify the accuracy of your statements, it can be advantageous to have expert advocate in your corner. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- It’s great to bank at a branch near you, but you can probably find higher rates online. Regardless of where you live, here are some of the best high-interest savings accounts.
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