16. April 2018
Paperless finances are ubiquitous these days. Every financial institution promotes paperless billing and paperless statements. You can get an email every month, letting you know the latest statement is ready for your perusal and download. No more paper copies to store somewhere. It’s a welcome step toward reducing physical clutter, but those statements are still relevant, both now and far into the future. Keeping a local copy, albeit a digital version, is still an important step in protecting your finances.
If institutions store electronic versions of every bill, you shouldn’t need to download them until you need them. As with file backup, the issue is relying on a third party for access to your critical data–finances in this case. There are two fundamental issues: availability and access.
Transitioning to electronic finances is difficult because expectations diverge. Customers might expect that with paperless statements, their finances will be available for the lifetime of their account. However, that assumption is rarely the case. All financial institutions allow customers to download statements from the past three to six months, but earlier than that, practices vary wildly. Some charge a service fee for downloading statements prior to that; others offer to send a paper copy, also for a fee. And the lengths vary between credit card accounts and checking/savings accounts, even at the same institution. See a few examples below:
Bank of America: 3 years of paperless statements, prior statements by mail for $3.
Chase: 6 months of paperless credit card statements, 7 years of paperless bank statements, prior statements by mail for $6.
Wells Fargo: 2 years of paperless credit card statements, 7 years of paperless bank statements, prior statements by mail for $5.
Fidelity: 10 years of paperless statements, prior statements by mail at no charge.
Moreover, policies change, so these numbers might not be accurate in six months.
Availability presumes you have access. You might forget your password or lose access to your email that’s connected to the account. You might close your account. You might even suffer from identity theft. There are a multitude of edge cases that come up where you can no longer access your online account and statements, regardless of how many months or years are available.
Local copies of your paperless financials are good, but you need to consider which institutions to include. The conventional wisdom is to keep bills and credit card statements for a year, bank statements and tax-related bills and statements for seven years, and retirement account statements and tax returns permanently. However, with electronic statements occupying an infinitesimal amount of space on modern storage, keeping records permanently is straight-forward.
A recent change to also consider is the Internal Revenue Service (IRS) and Social Security Administration (SSA) going paperless. You can now create an account with both to access digital versions of personalized IRS documents or your social security benefit statement. In particular, the IRS provides the following Transcripts, necessary for various legal agreements like loans, at no charge. The "Tax Return Transcript" document generally meets the needs of lending institutions offering mortgages and student loans.
At Retrospect, we’re always thinking about how to protect all of your data. Valuable data isn’t just Word documents, Exchange databases, and Hyper-V guests. Your financial history is absolutely critical to your business or personal life, and with the advent of paperless finances, we need to adjust our steps for protecting that data without relying on third parties. The best backup is the one you manage, because you’re the person it matters the most to.
Brian Dunagan is Vice President, Product Management at Retrospect and has been with Retrospect for more than a decade.