A credit card is issued to a cardholder by the issuer, offering credits for purchases, cash advances, and bank transfers. The cardholder promises to pay the loan back in charges agreed upon on a specified date in the future.
What is a credit card statement?
A credit card statement summarizes the amount of money you have used on your credit card for a specified billing period. Credit card statements are received by mail. It can be difficult to read credit card statements since they have numbers, percentages, and terms that may be difficult to understand if you don’t familiarize yourself. Take time and understand every piece of information on the statements to prevent yourself from paying more than you spent.
How long should you keep your credit card statements?
Reading statements helps you to detect unauthorized charges and errors. Verify the purchase amount by comparing the transactions list with receipts. If you notice any fraudulent charges on your credit card statement, report immediately to your credit card company. The Fair Credit Billing Act suggests you should report any unusual charges from your credit card within 60 days for protection. Apart from the law, credit companies can lengthen the number of days to report the issue.
Generally, it would be best if you kept your credit card statements until you have made the payment and processed it. You can also verify the payment has been made or wait until the next statement to be processed with your online account. The wait is about 30days, after which you can dispose of your physical statement.
Some circumstances may cause you to hold your credit card statements for a longer time. Below are some of them.
When you have tax-related purchases
Examples of tax-related purchases include your organization’s expenses, grants, and donations. Keep your credit card statements for tax returns. It is advisable to keep them for at least six years to have your tax history in place in IRS audits.
When the purchases made are covered by return or purchase protection.
The policy varies from one company to the other. If the product you have purchased has an issue and needs repair or replacement, most companies will correct it within 90 days after the purchase. Keep and maintain your statement until the protection period is over. If your purchases are on extended warranty protection, ensure you keep the statement until the warranty expiry date.
If you want to track your spending
Tracking your spending habits is essential because it helps you to know your financial allocation. You will have a reasonable budget when you review your spending habits over time. It is also important to keep your receipts along with your credit card statements for better financial decisions.
The organization of both hard and digital copies of your financial documents is vital. It is easy to find what you want when you have an organized filing system. Create a folder and subfolders for your digital copies and name them accordingly for easy access. For your hard copies, get binders or folders and categories the documents yearly.