If you own a credit card, you know that you receive monthly statements detailing your transactions, payments, and other important information. But how long should you keep those statements? Should you keep them indefinitely or is there a specific timeframe you should follow? In this article, we will discuss the recommended duration for keeping credit card statements and the reasons behind them.
Why Should You Keep Credit Card Statements?
Credit card statements are an essential record of your financial transactions. They provide proof of purchases, payments, and credits. Moreover, they can be helpful in identifying errors or fraudulent activities on your account. For instance, if someone makes a purchase using your credit card, you can quickly identify it from your statement and report it to the credit card company. Credit card statements can also help you keep track of your spending and budget better.
How Long Should You Keep Credit Card Statements?
The duration for keeping credit card statements depends on the type of information they contain. Here are the recommended timeframes for retaining credit card statements:
One Year
You should keep credit card statements that contain non-tax-related transactions, such as purchases, payments, and credits, for at least one year. These statements are useful for keeping track of your spending, budgeting, and identifying errors.
Three Years
If your credit card statement includes tax-related information, such as deductible expenses or charitable contributions, you should keep it for at least three years. The IRS can audit your tax return for up to three years after the filing date, so keeping these records for three years can provide proof of your expenses in case of an audit.
Seven Years
If you have claimed a loss from a worthless security or bad debt deduction, you should keep the credit card statement for at least seven years. The IRS can audit your return for up to seven years if they suspect fraud.
Indefinitely
If you have made any home improvements, you should keep the credit card statements indefinitely. The reason behind it is that you can add the cost of home improvements to the cost basis of your property, which can help reduce the capital gains tax when you sell it.
How to Store Credit Card Statements?
It is essential to store credit card statements securely to avoid any misuse of your personal information. Here are some tips for storing credit card statements:
- Store paper statements in a fireproof and waterproof box or a safe.
- Use a password-protected online storage service for electronic statements.
- Ensure that your storage location is easily accessible in case you need to retrieve any information.
What Should You Do with Old Credit Card Statements?
If you have credit card statements that have passed their recommended retention period, you should shred them. Shredding old statements can prevent identity theft and protect your personal information.
How to Check If Your Bank Provides Online Statements?
Most banks offer online statements that you can access by logging in to your account. You can check with your bank if they provide online statements and opt-in to receive them. Electronic statements are more secure than paper statements as they cannot be misplaced, lost, or stolen. Additionally, they can be accessed anytime, anywhere, and are usually available for a more extended period than paper statements.
Why Should You Shred Old Credit Card Statements?
Shredding old credit card statements is crucial in preventing identity theft. Identity thieves can use your personal information, such as your name, address, and credit card number, to open new credit accounts, make purchases, or even apply for loans. Shredding your old statements can protect you from such fraudulent activities.
How to Opt-Out of Receiving Paper Statements?
If you prefer not to receive paper statements, you can opt-out by contacting your bank or credit card company. Most banks provide an option to receive online statements, which are more secure and environmentally friendly.
How to Check for Errors on Your Credit Card Statements?
It is essential to review your credit card statements regularly to identify any errors or fraudulent activities. Here are some steps to follow:
- Check the transactions: Review all the transactions on your credit card statement to ensure that you recognize them.
- Verify the amounts: Verify that the amounts charged are correct and match the prices of the items you purchased.
- Check the due dates: Make sure that the payment due dates are accurate.
- Verify the interest rates: Check that the interest rates charged on your credit card are correct.
- Check the fees: Review any fees charged on your credit cards, such as late fees, annual fees, or over-the-limit fees.
What to Do If You Find Errors on Your Credit Card Statements?
If you find any errors or fraudulent activities on your credit card statement, you should report them immediately to your credit card company. Here are some steps to follow:
Contact your credit card company: Call the customer service number on the back of your credit card and report the error or fraudulent activity.
Provide details: Provide your credit card number, the date and amount of the incorrect transaction, and any other relevant information.
Follow up: Follow up with your credit card company to ensure that the issue has been resolved.
What About Keeping Electronic Statements?
If you receive electronic statements, you should store them securely by using a password-protected online storage service. Additionally, you should ensure that your computer is protected with anti-virus and anti-malware software.
What to Do If You Close Your Credit Card Account?
If you close your credit card account, you should retain the credit card statements for at least seven years. The reason behind it is that you may need them for tax purposes or in case of any disputes or legal issues.
Conclusion
In conclusion, credit card statements are important documents that can help you keep track of your spending, and budget better, and identify errors or fraudulent activities. The duration for keeping credit card statements depends on the type of information they contain, and it is essential to store them securely to prevent any misuse of your personal information.
