How to dispose of financial documents: Best practices

We live in a modern world, surrounded by sensitive documents—whether physical or digital—that contain our personal information. From bank statements and tax returns to prescription labels and junk mail, these documents can be a gold mine for identity thieves.

Unfortunately, identity theft is all too common: The Federal Trade Commission (FTC) received more than 1 million reports of identity theft in 2023, and 2.6 million fraud reports overall, for a total of more than $10 billion lost.

However, there are ways to protect yourself and your information. One important strategy is ensuring you dispose of sensitive documents securely.

Step 1: Know what documents should be discarded safely

There are some documents you should keep forever, and some you can dispose of. Certain documents, like your birth certificate and social security card, are best kept in a fireproof safe. And if you’re saving copies in the digital realm, the FTC recommends encrypting sensitive data wherever you store it.

There are plenty of financial documents you can dispose of —but you should discard them with care. There are recommended timelines for shredding financial and other sensitive documents—for example, the rule of thumb from the IRS is to keep tax records for three years from the date you filed your original return, and seven years for specific filing types. But after seven years, you should discard these files safely.

Tip: A great way to keep track of documents’ timelines is to mark expiration dates on them as you file them away.

Here are some documents you should dispose of securely:

• Bank statements
• Canceled checks
• Credit card statements
• Tax records after seven years
• Medical records
• Prescription labels
• Pay stubs
• Bills and phone statements
• Investment reports
• Shipping labels
• Junk mail, especially pre-approved credit offers

Step 2: Shred physical documents

Do you have physical documents from the list above? Make sure to shred them to keep your information secure.

When it comes to financial document shredding, keep in mind that not all shredders are created equal—there are different types of shredding devices, each with its own security rating. The traditional type, a strip-cut, isn’t very secure because it cuts paper into long, uniform pieces. For a more secure option, cross-cut shredders dice documents into confetti-like pieces, while micro-cut shredders reduce them to tiny particles. These provide a higher level of security, making document reconstruction nearly impossible.

Professional document destruction services are another option for ensuring your sensitive information is disposed of securely. You can also check for community financial document shredding events near you, which are sometimes free to attend. And going paperless as much as possible is another option. In addition to reducing your paper trail, you’ll be helping the environment.

Step 3: Properly delete digital documents

Even if you’ve already made an effort to go paperless, don’t forget about your digital footprint. Disposing of financial documents on your computer or in the cloud requires just as much care to ensure they don’t fall into the wrong hands.

If you have sensitive documents in digital form, discarding them in your computer’s trash bin might not be enough. It’s safest to use software that securely erases data because, according to the FTC, a savvy computer criminal might be able to re-create a file you simply moved to your trash. Secure data-erasure software overwrites your hard drive so your files cannot be recovered.

Chances are you have some sensitive documents in the cloud, as well. If so, make sure you’re permanently deleting those, too. You should check the cloud system you use for specific deletion instructions, but keep in mind the process may entail more than one step, such as deleting the item and then permanently emptying the trash.

Considering how to dispose of financial documents is a big step toward thwarting fraud and staying safe. But financial security doesn’t end there; Discover^® can help you take other actions to protect your privacy online.

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The information provided herein is for informational purposes only and is not intended to be construed as professional advice. Nothing contained in this article shall give rise to, or be construed to give rise to, any obligation or liability whatsoever on the part of Discover Bank or its affiliates.