Keeping credit card statements can be helpful for various reasons. It’s essential to keep your financial records organized and up-to-date. In this article, we’ll be discussing the best practices for how long you should keep credit card statements.
Credit cards are a convenient way to pay for purchases, but they also generate a lot of paperwork. Credit card statements can pile up quickly, and you may wonder if it’s necessary to keep them all. In this article, we’ll explore why you should keep your credit card statements and how long you should keep them.
Why Keep Credit Card Statements?
Credit card statements are an essential piece of financial documentation that can help you in various ways. Here are some reasons why you should consider keeping your credit card statements:
- Budgeting: Credit card statements can help you track your spending habits and budget more effectively. You can identify areas where you’re spending too much and make adjustments.
- Tax Purposes: If you claim any tax deductions, you’ll need to keep your credit card statements as proof of your expenses.
- Disputes: If there’s a billing error or fraudulent activity on your account, your credit card statements can help you dispute the charges.
- Loan Applications: Some lenders may ask for your credit card statements as part of the loan application process.
How Long Should You Keep Credit Card Statements?
The Short Answer
The general rule of thumb is to keep your credit card statements for at least three years.
The Long Answer
There are specific guidelines for how long you should keep your credit card statements, depending on the type of transactions and their significance.
- Tax Purposes: If you claim any tax deductions, you should keep your credit card statements for at least seven years after filing your tax returns. This is because the Internal Revenue Service (IRS) has up to six years to audit your tax returns.
- Investment Records: If you use your credit card for investment purposes, such as buying stocks or mutual funds, you should keep your statements for as long as you own the investments, plus seven years after you sell them.
- Insurance Claims: If you file an insurance claim, you should keep your credit card statements for as long as you own the policy plus seven years.
- Home Improvements: If you make any home improvements and claim them as tax deductions, keep your credit card statements for as long as you own the property plus seven years.
Exceptions to the Rule
There are exceptions to the guidelines mentioned above. For example, if you’re involved in a legal case, you may need to keep your credit card statements indefinitely. In this case, it’s best to consult with a lawyer to determine the appropriate retention period.
What to Do With Old Credit Card Statements?
Once you no longer need your credit card statements, it’s essential to dispose of them securely. Here are some options:
Shredding your credit card statements is the most secure way to dispose of them. Use a shredder that can shred paper into small pieces and dispose of the shredded paper in a secure bin or bag.
You can also opt to store your credit card statements digitally. Scan them and save them as PDFs or store them in a secure cloud storage service like Google Drive or Dropbox. Make sure to password-protect the files and use a reliable encryption method to keep them secure.
Other Tips for Keeping Financial Records
Aside from credit card statements, there are other financial records that you should keep for a specific period. Here are some tips:
- Tax Returns: Keep your tax returns for at least seven years. This is the amount of time the IRS has to audit your returns.
- Bank Statements: Keep your bank statements for at least one year. You may need them for tax purposes or to dispute any errors.
- Paycheck Stubs: Keep your paycheck stubs for at least one year. You may need them to verify your income when applying for a loan or a new job.
- Investment Records: Keep your investment records for as long as you own the investments, plus seven years after you sell them.
Keeping your credit card statements organized and up-to-date is essential for your financial well-being. Knowing how long you should keep them can help you declutter your records and make sure you’re complying with the legal guidelines. Remember to shred or store them securely once you no longer need them.
Can I throw away my credit card statements after one year?
It’s generally safe to dispose of credit card statements after one year. However, if you’ve claimed any tax deductions, you should keep them for at least seven years.
Can I store my credit card statements on my computer?
Yes, you can store your credit card statements on your computer as long as you use a reliable encryption method and password-protect the files.
How long should I keep credit card statements for business expenses?
If you claim any tax deductions for business expenses, keep your credit card statements for at least seven years after filing your tax returns.
Should I keep physical copies of my credit card statements?
It’s not necessary to keep physical copies of your credit card statements. You can opt to store them digitally or shred them securely.
Do I need to keep credit card statements for a closed account?
Yes, you should keep your credit card statements for a closed account for at least three years, especially if you have any unresolved disputes or legal cases related to the account.