To keep or not to keep?

By Emma Lunn

Consumers have a fine line to tread when it comes to keeping or destroying financial information.

On one hand, it's a good idea, and sometimes mandatory, to keep certain financial documents for a set period of time. On the flip side, it's wise to destroy some documents you no longer need because they increase the risk of identity fraud - not to mention, the chance of fire or just general ill ease created by piles of paperwork.

So, when is it safe to throw away your financial documents?shredding-documents

"Keeping track of your financial and personal information is important, and there are times when you will be called upon by different service providers that will require records from the past," says James Jones, head of consumer affairs at Experian. "However, if you are a burglary victim, then it is quite possible that paperwork, as well as valuables, could be taken because personal information holds a value too. Therefore, it is very important to think about the security of all such documents containing potentially sensitive information to minimise the risk of identity fraud should a criminal get hold of them."

Weighing the risks
There is no legal requirement to keep bank statements and credit card bills, and experts are split on how long you should keep them. Jones suggests shredding anything older than six months.

Andrew Hagger, personal finance specialist with MoneyComms, suggests keeping statements longer in case you have tax queries from HM Revenue & Customs. You also might need them for legal claims, such as those surrounding payment protection insurance. "It sounds like an awful lot of paper," he wrote in an email. "However, many banks and credit card companies now provide online statements that you can keep on your own [computer]."

He suggests making a backup of such documents in case you have computer problems.

If you're applying for a mortgage, bear in mind that lenders like to see original bank statements -- not online print-offs -- normally going back three to six months. If you bank online, you can order these from your bank. If you're moving into a new rental property, the landlord or agent may request to see the same thing.

Fire up the shredder
Throwing documents into the rubbish bin or recycling without destroying them could allow identity fraudsters to find and use them. If you keep old photo IDs, make sure you store these securely, too, and destroy them before throwing them out.

"Shredding all personal and financial documents that are more than six years old is sensible; for any crucial documents, such as deeds of property, national insurance numbers, passports, etc., consider getting a safe or heavy filing cabinets," says Jones. "Guidance on keeping documents such as P60s varies, but you should keep recent documents for at least a couple of years so that if HMRC have any backdated queries you can easily refer to documentation."

See related: How to safely get rid of an old credit card, Tips from the pros: Sorting your financial clutter

Published: 6 September 2013