The Digital Ways to Store Financial Information
Your financial records contain detailed information that you need to keep secure if you want to protect your finances, privacy and identity. But it's also important that you keep your financial records where you can access them, such as for an audit, when applying for a loan or for your own reference. Digital storage is more secure than keeping paper records, but it can have its drawbacks, depending on which option you choose.
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Hard Drives
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Hard drives are the conventional place to store electronic financial documents, scans of your tax returns and e-mail notices from your bank, credit cards and investment managers. Your computer's internal, local hard drive is its default storage location. But it is also accessible to anyone who uses your machine. Even if you use password protection, someone who gains access to your computer, either by stealing it or accessing it remotely over the Internet, can break through its security and see any financial records on the hard drive.
CDs and DVDs
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One option for getting your financial documents off of your computer's hard drive is by burning them to CD-R or DVD-R discs and deleting the original files. CDs and DVDs are compact and easy to store in a home safe or safe deposit box. Some versions, known as CD-RWs and DVD-RWs, allow you to add new data later and erase old data from the disc. One drawback to CDs and DVDs is their fragile nature; scratches, as well as heat and moisture, can corrupt the data on a disc and make it difficult or impossible to view on your computer.
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Online Storage
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Online storage is one of the best options for storing sensitive financial information if you choose a reputable service. Online services allow you to upload your files to a secure server where the data are encrypted and stored in multiple locations to protect against accidental loss or damage. You can access your data by logging into the service from any computer, and there's no need to recover a physical storage device when you need information. Online storage services may even offer security guarantees that will pay for any legal fees or costs associated with someone getting access to your files. For their services, online storage businesses charge an annual or monthly storage fee that limits how much data you can store at any given time.
Flash Drives
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Flash drives offer an alternative to storing financial data on CDs or DVDs. Flash drives are small devices that plug into a computer's USB port. They offer fast transfer rates, the ability to rewrite information and a very small form that makes them easy to keep safe. They are also more durable than CDs and DVDs, allowing them to keep your information safe even if you store them in less than ideal conditions. Some flash drives even feature a small number pad for inputting a password that the drive requires before displaying any data.
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