Identity theft can scare the bejeezus out of anyone — drained bank accounts, credit cards set up in your name, purloined Social Security numbers, oh my — but that doesn’t necessarily means you should buy into an expensive credit protection service. Our wise older siblings at Consumer Reports break it down in a new installment of Money Adviser.
There’s a lot of hype around ID theft, but Consumer Reports thoroughly investigated those costly services marketed to consumers who want to protect themselves and found that they aren’t necessary.
“There are cheaper and more effective ways to protect yourself from identity theft,” said Noreen Perrotta. “There are many things you can do for free, such as signing up for online access to your bank and credit accounts and monitoring them frequently.”
ID theft protection services can cost from $120 to $300 a year, and are supposed to monitor your credit reports around the clock, scouring “black-market chat rooms” for your personal information, removing your name from marketing lists, and filing fraud alerts.
But the value you get for what you pay is questionable, says CRMA. For example, marketers try to scare up business by presenting scary facts about ID theft. However, banks and other financial institutions are getting better at preventing theft, and consumers have also caught on to patrolling their own accounts.
Some good strategies to keep in mind:
‚Ä¢ Take the threat seriously, but keep your cool. Most ID theft will only result in around $50 consumer liability for a lost or stolen credit card.
‚Ä¢ Check out any protection service with the Better Business Bureau first before signing up.
‚Ä¢ Be self-sufficient. Sign up for online access to all your bank and credit accounts and monitor them frequently, as well as your credit reports.
For more tips on how to protect yourself, check out Consumer Reports and sign up for the monthly Money Adviser newsletter.