By Ellen Cannon of NerdWallet
You do everything electronically and rarely get anything you want by snail mail. You do your banking from your smartphone. Now your credit card issuer is urging you to opt out of receiving paper statements each month and switch over to electronic statements entirely. Should you?
American consumers have embraced online banking since banks began offering it in the early 2000s. Electronic statements appeared shortly after, as banks realized they could cut their printing and mailing costs dramatically by encouraging customers to “go paperless.”
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Banks promote e-statements as a convenience — less clutter, “one less piece of paper to worry about” — but consumers haven’t been so quick to say goodbye to their paper. According to the Consumer Financial Protection Bureau, only one-quarter of credit card holders who have access to a computer choose to receive their monthly statements electronically. Of those who do receive e-statements, the study indicates that many aren’t reviewing them.
Statements serve important roles
They may be missing important information, says Chi Chi Wu, staff attorney at the National Consumer Law Center, who, with associate director Lauren Saunders, wrote a report on the importance of paper statements.
“Financial account statements serve several important purposes — as a record of transactions, fees and interest charged; to enable consumers to check for unauthorized charges or errors; and as a reminder to pay a bill,” Wu tells NerdWallet. “They are also important to prepare tax returns, apply for a mortgage, or to help family members dealing with an elderly consumer or to settle a deceased’s estate.”
Even so, consumers may be willing to adopt e-statements if it means saving money. In a 2014 survey by Novantas Data Services, a financial services consulting firm, 72% of all respondents said they’d choose to receive electronic statements if it meant they could get free checking. That was the highest percentage among the options in the survey.
By comparison, about 40% said they’d be willing to pay a certain number of bills per month online in order to get account fees waived; 36% said they’d be willing to use a debit card a minimum number of times per month; 27% would accept electronic-only banking (e.g., ATMs and mobile apps, but no tellers); and 18% would agree to have multiple financial products from the same institution.
The permanence of paper
“Paper has its advantages,” Wu says. “Paper statements are permanent, easy to access and easy to use; thus, consumers are more likely to review them.”
Another benefit of paper statements is that you’ll probably keep the statement longer than your card issuer will make it available to you online. If you need specific information for taxes or to dispute a charge, it’s easy to go through past statements to find what you need.
And even though you’re receiving your statement in the mail, you don’t have to pay it by mail. You’ll still be able to pay your bill online, saving you time and postage.
For some consumers, though, paper statements come at a cost. “Many banks are coercing consumers into opting in to electronic statements by charging them for paper statements,” Wu says. “We think that financial institutions should not, and arguably cannot legally, charge a fee for providing something they are mandated by law to provide.”
Accounts that require written statements are credit card accounts; bank accounts if they’re accessible by ATM, debit card or other electronic means; and mortgage accounts. “Even a small fee can discourage consumers from getting information in the way that works for them,” Wu says.
The ease of e-statements
Banks and credit card issuers have trumpeted the convenience benefits of e-statements — less paper and postage, less clutter — and they’re not wrong. You do save paper. You do have fewer pages to file away. If you pay your bills online through your credit card’s website, you can review your statement and be sure the charges and fees are accurate before you pay. This saves time as well as paper.
But you trade paper clutter for email inbox clutter. Many people already get more email than they can read, and an email from your credit card issuer alerting you that your statement is available online may get lost in the shuffle. You may miss a payment — potentially incurring late fees or even damaging your credit score — especially if it’s for a credit card you don’t use often.
Another drawback noted in the National Consumer Law Center report is that “electronic records can be a disaster for the aging and their families.” People have enough trouble remembering their own logins and passwords. Imagine having to manage the finances of an aging loved one whose credit cards and bank statements are accessible only via computer, and you have no login information.
Best practices for managing e-statements
If you decide to get e-statements only, follow these tips so you don’t slip up and harm your finances:
1. Open and save your statement each month. When you get the email saying your statement is available, go online and download it. Don’t just glance at it online; save it to a place where you can access it in the future. If there’s a transaction you want to dispute, you’ll need a printed copy of it.
2. Check your credit card account throughout the month. You don’t need to wait for the monthly statement. Check in on your account once a week online or on your credit card’s mobile app to keep an eye out for any suspicious charges or fees.
3. Create a filing system for your financial records. No matter what form your statements or bills take, it’s important to be well organized to manage your money. For e-statements, make a folder on your hard drive for your financial life. Then make folders for each of your accounts. Or you may want to organize your files by month to be sure you’ve taken care of all your bills.
4. Keep a record of your payments. Make a spreadsheet with all your accounts in one column and the months across the top. Each month, type in the amount you paid. The benefits are twofold: You can be sure you paid that bill, and you’ll be tracking your spending.
5. Keep your contact information up to date. If you change your email address, how are you going to get your e-statements? Your bank or credit card issuer needs to know your email address, mailing address and phone number. If you move, go through your bills in your financial files to be sure your records are current.
6. Make sure your computer is secure. This is crucial whether you receive paper statements or electronic ones. And change those passwords regularly.
Ellen Cannon is a staff writer at NerdWallet, a personal finance website. Email: email@example.com. Twitter: @ellencannon.
This article originally appeared on NerdWallet.
Credit Card E-Statements: If You Go Paperless, Do It Right
Monday May 2, 2016/