Terminal digit filing groups the last digits in an identification number to use as the primary identifier for filing. A Social Security number ending in 0000 would have the last four digits used to classify the individual record within the system, and the remaining two groups of digits would be the subgroups under 0000.
Number groups are recorded on the file in reverse order, so an identification number of 555-44-3333 would have 3333 as its primary group, with 44 and 555 following to determine the file's location in the 3333 category. Files are arranged in ascending numerical sequence. Organizations usually used color-coded labels on terminal digit files for easy identification.
New terminal digit files aren't automatically clustered in the same physical location, preventing congestion in the file room. Because the only information on a terminal digit file is numerical, the system provides more privacy than labeling the jacket with a name.
Terminal digit filing works well in organizations that have to deal with tens of thousands of records or more. Although terminal digit filing is most often associated with health care and insurance organizations, it's also often used in government agencies and financial institutions.