In short, you should keep bank statements for a minimum of one year, either in a hard copy or electronic format. After this period, it's safe to shred and discard them.
Reasons for Keeping Statements
Outside of having records for purchases, bill payments and payroll deposits, keeping old bank statements offers a number of benefits. Bank account activity should be reviewed regularly for instances of identity theft and debit card fraud. Keeping statements provides verification of illicit activity that can be used to recover any damages. You can also use bank statements to verify income and transaction activity, such as charitable contributions and business expenses, that you might need for tax returns. Bank account statements confirming large purchases or payments may also be worth hanging on to. You can shred automatic teller machine (ATM) receipts once you have reconciled them with account records. Similarly, deposit and withdrawal slips can be shredded once the transaction is verified with the monthly statement.
Online vs. Hard Copy Statements
Maintaining hard copies of bank statements is less of a necessity than in the past given the availability of account information online. Many banks and financial institutions maintain monthly customer statements online for five years or longer that are accessible through their online banking platforms. Detailed statements often come in easily printable formats, and summarized transaction information is frequently available for download free of charge.
For safety, it's best to keep any hard copy bank statements in a fireproof safe in a secure location. Electronic statements should be maintained in a password-protected file.
Shredding Documents Is a Good Idea
Because so many different documents have different requirements for disposal, it might seem like it's just easier to keep everything forever, including bank statements. However, keeping some documents indefinitely isn't the best practice, primarily because of the potential for identity thieves to get a hold of them. Other documents you should shred after a certain period of time include the following:
- Credit Card Statements – 60 days unless they include tax-related expenses, then 7 years
- Pay Stubs – Match them to your W-2 and then shred
- Utility Bills – 1 year
- Tax Returns and Tax Receipts– 7 years
- House and Car Insurance Policies – Shred when you receive new policies
- Mortgage Statements and Home Improvement — Shred when you sell the house
Best Ways to Shred Your Documents
When you're ready to dispose of your bank statements, make sure you actually shred them. Just ripping them in half, isn't going to stop identity thieves from piecing together your personal information. If you have a shredder, you can take care of this yourself. If not, you might have to hire a service, especially if you have a large number of documents. Also, check with your bank. Many will offer shredding services to customers without a charge.