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- Many people make the mistake of getting rid of important bank documents too soon or incorrectly.
- It’s recommended to keep most important paper documents in a locked place for seven years.
- Keep online documents safe by adding antivirus software and monitoring usage with public computers.
When you’re storing important bank documents, it’s better to be safe than sorry. Whether you receive most of your financial information online or through the mail, here’s what you need to know to ensure your personal financial information is as safe as possible.
How long should I keep financial documents?
Patrina Dixon, CFEI and owner of P. Dixon Consulting, LLC, recommends keeping any bank statements or other important financial documents for up to seven years in case you’re audited.
If you would prefer to minimize your paper trail, Dixon advises opting for online bank statements. Some financial institutions have a paper statement fee, so you might avoid a monthly bank fee, too. If you’re trying to minimize fees in day-to-day banking, Insider has a list of the best free checking accounts.
If you’re choosing paper, you can store your paper documents in a locked filing cabinet. Safe deposit boxes may be worth exploring if you have important business documents. However, it’s generally not recommended for documents you want others to have easy access to, like your will or final wishes.
Dixon also notes voided checks, in particular, need to be voided and stored properly.
“You should have ‘VOID’ written out across the entire check and with a red marker if possible,” says Dixon.
Dixon adds that you may keep the voided check until you know that any following checks have been processed.
After seven years, you may discard financial papers. However, you’ll need to take precautions to ensure your personal information is safe. Instead of simply throwing away your documents, shred them first and make sure your personal information can’t be deciphered.
Is it worth keeping old bank statements?
Dixon says people often make the mistake of not keeping financial documents. Whether you get online or paper statements, Dixon says you’ll want to make sure you are keeping them and storing them properly.
It’s worth keeping old financial documents in case you are audited by the IRS and need to review information from a previous tax return.
The IRS may ask about returns filed in the last three to six years. Any of the following financial documents may be needed to verify your income, credits, or deductions claimed for a tax return, according to IRS:
- Canceled checks
- Legal papers
- Loan agreements
- Business logs
- Travel tickets or lottery tickets
- Medical and dental records
- Insurance reports
- Theft documents
- Employment papers
- Schedule K-1
If you made a purchase with your debit card or set up online bill pay through your bank account, your statement may include pertinent receipt or billing details.
How can I safely store my documents online?
Online financial documents still need to be kept securely as well. Online documents can be stored safely on a flash drive, or you may keep the document encrypted so it’s protected by a password on a personal computer.
Dixon recommends installing anti-virus software if you’re concerned about a potential security breach. You’ll also want to review your software to see if it’s up-to-date.
If you use a public computer to check your online bank information, Dixon says you should clear your search history before you finish using it. Also, if you print out any documents, you’ll want to double-check you have all your documents in case you accidentally printed something more than once.