Go paperless for safer banking

By Liz Pulliam Weston

I did it. I finally went paperless.

I’ve been using personal finance software for more than a decade, and paying bills online for nearly as long. Paper statements from my brokerage, bank and credit card companies were afterthoughts; in fact, I usually thought of them only when cursing the clutter they caused and the storage space they demanded.

But it wasn’t convenience or the urge to simplify that finally led to the switch. It was security.

Video: Stop identity theft cold

Identity theft experts have been telling us for years that sending sensitive financial documents through the mail is a bad idea. Paper account statements and credit card bills often give mail thieves all the information they need to hijack our finances.

A way to pare down the risk

We can lessen the danger by buying a locking mailbox and depositing outgoing mail at the post office. But we can really limit the risk by going paperless.

Banking entirely online can reduce your chances of becoming the victim of identity theft, according to researcher James Van Dyke.

Those who choose to do so, though, are in the minority. While 60% of Internet-enabled households bank online each week, and 70% pay some monthly bills online, only about 40% forgo paper statements, said Van Dyke, founder of Javelin Strategy & Research in Pleasanton, Calif.

Interestingly, Van Dyke thinks more consumers would sign up for paperless options if banks and other financial institutions would get their act together. Consider:

• Many financial institutions don’t offer a paperless option. Institutions like Bank of America, Citibank and Wells Fargo encourage customers to bank exclusively online, but smaller banks often don't. This, frankly, is nuts. Eliminating paper saves the banks money, but “most banks are pretty conservative,” says Van Dyke.
• Few that do offer the option really push it. Few financial institutions offer any kind of financial incentive to forgo paper. Given how much paper statements cost to create (75 cents to more than $2 a pop), you think banks could be a little more generous.
• Many that do offer the option don’t offer enough support services. Having 24/7 technical service is a good idea, Van Dyke said, but not an option all financial institutions offer. Most institutions also won’t alert you by e-mail if a suspicious transaction occurs in your account, and most limit the number of prior statements you can access online. (Since banks are required to keep statements for seven years, it would be nice to have instant access to those rather than having to make a request for archived copies to be mailed.)

Continued: Raise your armor

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