One prime reason Americans get into debt or make impulse buys is that they can’t or won’t appreciate the macro context of their actions. We don’t like seeing the big picture when it relates to the way we handle money. If we paid more attention to spending habits, we could cut down on frivolous expenses. Or we could identify attempted identity theft before it happened. There are many reasons why you should always keep credit card statements.
Here are five reasons why you should get in the habit.
Protect Your Personal Data
According to data compiled by the Nilson Group, a data analytics firm that tracks credit card fraud statistics, scam artists stole over $28.6 billion via fraud from credit cardholders on a global scale in 2019. And credit card scam artists stole over $11 billion in the United States alone.
You should always keep credit statements as a proactive defense strategy against identity theft. Too many people think action movie-type computer hackers commit identity fraud.
Are you the type of person who throws out your credit card statements, envelope and all, into the garbage? Many scam artists are expert dumpster divers and target discarded mail to get personal info.
A good scam artist only needs three or four data points on you to steal your identity, take your money, and create a mess you’ll have to deal with.
Additionally, you only have a limited amount of time to report a credit card with being considered a suspect.
The Fair Credit Billing Act recommends that you report suspected credit card fraud instances within 60 days of the incident. Pay attention to your credit reports – the sooner you report suspicious activity, the better.
Not recognizing blatant instances of credit card fraud on your credit card statements implies that you are obscenely oblivious to your credit report or potentially involved to investigators.
If you keep your credit card statements, you can confirm and double-check any attempts at fraud or mistakes. You can also check them against proofs of purchases and receipts. And if concerned bank officials involve the police, credit card statements will easily clear you as a suspect.
Budgeting
The most optimum way to become financially independent is to keep a budget. When you keep a budget, you are always aware of your income, debt, expenses, and frivolous spending habits.
Less than 30% of Americans keep a regular budget in their personal finance practices.
Always keep credit card statements, and you will always be apprised of your purchase habits. And you will learn about your spending habits if you are spending too much on credit card interest, paying balances too late, and other important data.
Charging Disputes
Mistakes happen all the time. You may be charged for purchases you didn’t make out of simple human or computer error.
It can take up to 30-days to three months for charging disputes to be resolved and wiped from your credit history.
Always keep credit card statements, and you will be able to resolve charging disputes sooner than later. Your credit card statement can clearly show what purchases you made and didn’t make and can be cross-referenced with receipts.
Tracking Business Expenses
If you own a business and routinely use business credit cards, then you should keep credit card statements.
You can use credit card statements to keep track of expenses. And you can also use credit card statements to keep more reliable tax records. You may need your business credit statements to justify expenses, large purchases or to satisfy a tax audit.
Tax Records
Do you want a great reason why you should keep credit statements?
Taxes.
The Internal Revenue Service, the Marvel Supervillain to your personal finances, can legally reserve the right to audit your entire financial history for six years, depending on the circumstances.
If you use your credit card for business expenses, to pay for vacations, to make donations, pay tuition, or a host of other expenses, then keeping your statement can come in handy.
How Long Should You Keep Credit Card Statements?
You should keep credit card statements for at least one year to seven years for your personal finance records.
Why?
If you have a bad credit history, it can take up to a decade for such records to be deleted.
Remember, the IRS can legally reserve the right to audit you for up to six years.
Additionally, if you own a business or use your credit cards often, keeping credit card statements is insurance against fraud.
Keeping your credit statements will also help you develop better personal finance budgets as well.
How Should Credit Card Statement Be Stored?
If you keep paper credit statements, then store them in a locked file cabinet or safe.
You can also opt to scan or take digital pics of your paper statements as well. However, you will have to be disciplined since you will be scanning or taking pics every month.
Never throw your paper credit card statements into the garbage without shredding them first. If you don’t shred your credit card statements before throwing them away, you may as well hand them out to random strangers.
Always Keep Credit Card Statements
Seven years may seem like a long time, but you should keep those credit card statements.
At the very least, you should keep those credit statements for at least three years.
If you can get in the habit of scanning or digitally photographing your credit statement, then you won’t have to worry about storing physical copies.
When it comes to credit statements, treat them like an insurance policy. It’s better to have them and not need them than need them and not have them.
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Allen Francis was an academic advisor, librarian, and college adjunct for many years with no money, no financial literacy, and no responsibility when he had money. To him, the phrase “personal finance,” contains the power that anyone has to grow their own wealth. Allen is an advocate of best personal financial practices including focusing on your needs instead of your wants, asking for help when you need it, saving and investing in your own small business.