Check out their “Facts for Consumers” advice at the FTC web site.

Direct Link: http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre19.shtm

Photo: mikkosaari

In addition to the Nigerian prince scam, endless variations on fake check swindles are being perpetrated by phone, letter and email, including these gems:

• You’ve won a foreign lottery and are sent a check that’s the first installment of your winnings. To get the rest, you must deposit and cash the check, then wire the money to someone who will pay facilitate the transaction and pay taxes on your behalf. (Note: Legitimate lottery winners must pay their own taxes directly to the government; also, it’s against federal law to play foreign lotteries by phone, mail or online.)
• Someone responds to your classified ad or online auction posting for a valuable item (car, jewelry, etc.). They have a logical-sounding reason why you‘re receiving a check above the purchase price: For example, they live overseas and asked someone in the U.S. who owes them money send you a check for more than your sales price; then, you’ll keep your share and wire the buyer the difference.
• You’re hired as a secret shopper to help evaluate a money-transfer service. You’re sent a check to deposit, minus your “pay,” and are then asked to wire out the remainder using the service being tested.
• Someone is “friended” by a stranger on Facebook (or meets through an online dating service). Later, after careful grooming, they eventually come to trust the person and agree to deposit a cashier’s check and wire the money to someone else as a favor to their “friend.”

What all of these scams have in common is that the checks themselves are fraudulent. Thieves count on the fact that your bank generally must make deposited funds available to you within a few days. However, weeks may pass before the bank ultimately discovers the fraud, at which point they bounce the check. You must then repay your bank the money or have your account frozen or closed and be sued. Some victims even face criminal charges for fraud because it looks as though they were in on the scheme.

Years ago, fake checks were easier to spot. But today’s sophisticated scanners, printers and software programs make it simple to create checks that sometimes even fool authorities. Here are a few warning signs the check may be doctored:

• Fake checks are often printed on lighter, slippery paper, and may be missing at least one perforated or rough edge, indicating they were printed from a personal computer.
• Missing or faded bank logo, suggesting it may have been copied.
• No street address or a P.O. Box only, or an inaccurate ZIP code. Verify the correct address with the issuing bank by searching its website or calling a local branch.
  • The bottom line on real checks contains digits representing the bank routing, account and check numbers. It is written in magnetic ink character recognition (MICR) font, which can be read by special check-sorting machines. Real magnetic ink looks and feels dull, while fake MICR numbers are often shiny.
  • Check number at the upper right corner doesn’t match the number on the MICR line.
  • Usually drawn for less than $5,000 because by law, deposits under that amount must be made available to you within five days. Crooks count on your completing their transaction before the check has actually been cleared by the issuing bank.
  • Stains or gaps around signatures, a digitized appearance, or odd pen strokes, suggesting a scanned or forged signature.
  • The first nine digits of the MICR line typically identify the routing number of the issuing bank. Having fewer or more than nine digits means it’s fake. Verify correct routing numbers at the Federal Reserve Financial Services website.

If you think you’ve been targeted by a counterfeit check scam, report it to the following agencies:

• The Federal Trade Commission (1-877-382-4357).
• The U.S. Postal Inspection Service (or call your local post office branch).
• Your state attorney general’s office.

Many good resources exist where you can learn more about fake check scams and how to avoid them, including the FBI, the Consumer Federation of America, the Federal Trade Commission and the National Consumers League.

Share these tips with your kids – and your parents as well, because senior citizens are particularly prone to falling for fake check scams. To paraphrase P.T. Barnum, there’s a new scam born every minute. Just make sure you’re not one of the poor suckers who falls for it.

This article is intended to provide general information and should not be considered legal, tax or financial advice. It’s always a good idea to consult a legal, tax or financial advisor for specific information on how certain laws apply to you and about your individual financial situation. 

To Follow Jason Alderman on Twitter: www.twitter.com/PracticalMoney

The content of this original article was provided courtesy of Jason Alderman and PracticalMoneySkills.com. Jason Alderman is Senior Director, Global Financial Education, with Visa, Inc.

Views expressed are the personal views of the author and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.

Photo: CarbonNYC

Here are actions to take if this happens to you:

First, contact the bank or credit union that issued your card. You’ll find a toll-free number on the back of your card, on your billing statement or at the company’s website. Close the compromised account and open a new one with a different account number. Change related passwords or PIN numbers and notify companies that have automatic payments tied to the closed account to make sure you don’t miss a payment. Also log all calls, letters and emails you have with your card issuer about the fraud – this will be helpful if you need to file a claim or police report.

Contact one of the three major credit bureaus, Equifax (888-766-0008), Experian (888-397-3742) or TransUnion (800-680-7289), and place an Initial Fraud Alert on your credit file if you suspect you have been, or are about to be, a victim of identity theft. Whichever bureau you contact will notify the other two to do the same. If you wish, you can renew these fraud alerts each quarter, free of charge. If you determine that you actually have suffered identity theft, you can also file an Extended Fraud Alert, which will stay on your reports for seven years.

Placing a fraud alert entitles you to one free credit report from each bureau. Although the alert makes it harder for someone to open new credit accounts in your name, it won’t necessarily prevent them from using existing accounts. That’s why it’s important to close compromised accounts and to carefully review your credit reports for errors, fraudulent activity, or suspicious credit inquiries from an unfamiliar source. Also be aware that posting a fraud alert could delay your own ability to obtain new credit.

If you determine someone has stolen from your account or your identity has otherwise been compromised, file an identity theft report with the police. The Federal Trade Commission’s “Defend: Recover From Identity Theft” website contains step-by-step instructions for completing and filing the report with local, state and federal law-enforcement agencies (www.ftc.gov/consumer).

Also send copies of the report – by certified mail, return requested – to the credit bureaus and companies whose accounts were impacted. You can also file a complaint with the FTC, which will enter the information into a secure online database shared by thousands of civil and criminal law-enforcement authorities worldwide (https://www.ftccomplaintassistant.gov).

Most card issuers provide “zero liability” coverage for unauthorized credit and debit card use when you promptly report the loss. Rules vary, so ask your bank or credit union for its policies.

Going forward, carefully monitor your monthly credit card and bank statements for fraudulent charges. To learn other good tips for protecting your personal and account information and preventing fraud, visit:

• The National Cyber Security Alliance’s www.StaySafeOnline.org.
• The FBI’s “Be Crime Smart” page (www.fbi.gov/scams-safety/be_crime_smart).
• Visa Inc.’s VisaSecuritySense (www.visasecuritysense.com), which contains tips on preventing fraud online, in stores and at ATMs, spotting deceptive marketing practices, and more.

The content of this original article was provided courtesy of Jason Alderman and PracticalMoneySkills.com.

Photo: 401K

Currently, US households owe an astounding $2.3 trillion in non-real estate debt, driving increasing numbers of Americans to turn to experts for help. “It was like an avalanche,” says Carole Carroll, who along with her husband, Donald, saw their credit card debit rise to $88,000 after trying to cope with job loss, family obligations, and other financial burdens. The couple, of Queens, N.Y., developed the dangerous habit of borrowing from one card to cover monthly balances on others, hoping it would give them time to improve their situation. It did not.

Debt can prevent you from buying a home, increase insurance costs, disqualify you when applying for a job, cause marital strife, and spoil future financial growth. In 2006, the Carrolls buckled down to pay off their debt, which they did in less than four years. Here are key steps that experts recommend for getting out of the red permanently:

1. Determine what you owe. “We didn’t actually know how much we owed,” says Donald Carroll, until he and his wife sat down and itemized their obligations. Making a list of all debts, payments, interest rates, and terms, say debt counselors, is a first step to getting out of a financial hole.

2. Consider professional help. The Carrolls contacted a nonprofit credit counseling agency recommended by the NFCC. The agency helped the couple devise a debt management plan and negotiated lower interest rates for them. When seeking advice, stick with nonprofit members of the NFCC, or financial planners affiliated with the Financial Planning Association.

3. Drop credit cards. A year before they got married this September, Tracy and Vincent Romano, also from New York City, decided to attack their combined debt of $200,000 from school loans and credit cards. The couple now sticks to cash and debit cards. “I had no self-control,” Tracy Romano says ruefully.

4. Trim the fat. Track your spending for 30 days, as it could open your eyes. A $3.95 daily specialty coffee during the workweek could cost nearly $28,000 over a 35-year career, says Steve Orr, a financial planner in Victoria, Texas. Investing that money instead could earn you roughly $247,000 at just 3 percent interest over the same period. The Romanos stopped eating out regularly and got a family cellphone plan.

Other hints: Cut $10 a month from such expenses as groceries, utilities, gas, gifts, and clothing; stop smoking, playing the lottery, and other costly habits; and quit paying for things you don’t use, like gym memberships.

5. Think creatively about bringing in more money. Debt counselors suggest that clients find ways to boost income. Options include taking on overtime shifts, as Tracy Romano does, getting a part-time job, staging a yard sale, or even selling other assets.

6. Use carrots and sticks. “Be kind to yourself,” advises Erika Safran, the Romanos’ financial planner, who encourages clients to sock away savings while paying down debt. NFCC Vice President of Membership and Public Relations Gail Cunningham agrees. Whether it’s going out to eat occasionally or saving for a vacation, she says, “a debt diet is like a food diet—if you cut too much, you’ll go off your diet.” The Carrolls were elated when they finally emerged from debt and lifted their credit scores from the low 500s to the high 700s.

Courtesy: Christopher J. Gearon; US News & World Report

Views expressed are the personal views of the author, and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.

The content of this article was courtesy of the National Foundation for Credit Counseling (NFCC) www.nfcc.org.  The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services. Springboard is an NFCC Member Agency.

Photo: chiotsrun

How it works is simple. The bank invests money by making a loan to the person buying the house. In exchange, each month the borrower makes payments to this loan. In the beginning, most all of the payment is interest, but a tiny fraction is a partial pay down of the amount owed. Over time, more and more of the payment is paid down and less is allocated to the interest until, at the end of the mortgage period, payments cease and the loan is paid off.

When a real bank holds a mortgage, they know that the payments will eventually stop. They use part of the cash flow from it to operate the business and to pay the owners a profit. But a good portion of the payments are put aside to reinvest. They make more loans, buy investments, or expand their services—all of which provide for even more future cash flow.

When individuals instead of banks invest in mortgages, they often forget how this cash flow works. When the mortgage is paid off, the payment cessation takes them by surprise. After all, they may have been earning from this investment for decades. They got used to the regular payment coming in the mail. They forget that part of this cash flow was a portion of the original amount they loaned out. Because of this they might not have a plan for the day when the payments end.

For the Bank of You, your career is like this mortgage. You invest in yourself through the gaining of skills and knowledge. You turn this into a career just as you turn cash money into a mortgage investment. Your career becomes an asset. Over time, you “monetize” your career asset—in other words, you turn your career into cash. You work and get a paycheck. You get used to that paycheck every month. Your lifestyle is built around that steady stream of income.

When that stream is cut off, a lot of folks find they don’t have a plan to keep living without it. As president of the Bank of You, steps should be taken to take some of each payment aside to reinvest it in some other investment. That way, once the steady mortgage is paid off, you still have other investments to live on.

Turn your career—this mortgage investment so crucial to the Bank of You—into assets that work for you. You can use part of your paycheck to run your business: pay taxes, fix the house, and pay utilities. You can use part of your paycheck for profit: that’s the fun stuff like vacations and spoiling the grandkids. You can also put a portion aside to reinvest.

Some of that investment will be in you. You’ll spend time and money becoming better at what you do. Some of that investment will be more diversified. Maybe you’ll own a rental home. Maybe you’ll invest in stocks or bonds. Maybe you’ll start a business on the side. No matter how it is done, it will be a way to multiply your original asset.

The important thing isn’t what you reinvest in (not that it’s unimportant), but that you reinvest. It is the only way to maintain a cash flow once your career asset is depleted.

Gary Silverman holds the Certified Financial Planner (CFP®) license and is a member of the Financial Planning Association (FPA®). Gary is the founder of Personal Money Planning, a retirement planning and investment advisory firm, and is a Qualified Kingdom Advisor.

Find out more about Personal Money Planning at the company website or follow on Facebook.

Views expressed are the personal views of the author, and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.

The content of this article was courtesy of the National Foundation for Credit Counseling (NFCC) www.nfcc.org.  The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services. Springboard is an NFCC Member Agency.

Photo: rachel_pics

The most wonderful time of the year has crept into October and November, but Christmas must be celebrated with a budget and a spending plan. A survey by Consumer Reports showed that 14.1 million or 6% of Americans are still paying off credit card purchases from the 2010 holiday season, up from 13.6 million in 2009.

Last year, approximately half of Americans charged at least some of their gift purchases according to the Consumer Reports survey. Credit cards provide an easy way to buy, but they must be used with caution, especially around the holidays.

Here are ten tips to avoid holiday credit card debt.

1. Start saving now. Look at what you spent last year and try to save that amount in the next two months. If you spent $500, you can save $71.50 per week for the next seven weeks and pay cash for everything you purchase, or apply that payment to your January credit card balance so you don’t have to pay interest on your holiday spending. Instead of eating out, take your lunch to work or eat more meals at home from now through December. Apply that money to your Christmas purchases.
2. Make a budget and then keep a record of all gift purchases and holiday expenses–from postage stamps to the food for the office party. It is hard for shoppers to make a budget and easy to underestimate their spending. Last year, respondents in the Consumer Reports survey anticipated spending an average of $457 on gifts, but really spent $556, a 22 percent increase. Of those that made a budget last year, 45 percent exceeded it.
3. Change your shopping habits now before you get into the spirit of the season. If you can’t afford to pay off your credit card in November, then you can’t afford to add a lot more to it in December. Generosity to friends or the perfect gift for the family are not good reasons to put yourself deeper into debt. If you are one of the 14 million people still paying off purchases from last Christmas, then you can’t afford shopping on a credit card this year. If you must use a credit card to pay for Christmas, make sure you can pay it off by Easter.
4. The best way to stick to your budget and avoid impulse spending is to pay in cash. Pulling cash out of your wallet or purse and handing it to someone else is painful and a reminder that the less you spend, the more you can keep.
5. Before making your first holiday purchase, verify the credit limit on every credit card you use. If you are unaware that your limit has been lowered, you can unknowingly exceed your credit limit. This can cause problems, including a lower credit score and a significantly higher APR.
6. If you are looking for a new credit card, this may be a good time to apply. If the card has a 0% introductory rate for purchases for six or 12 months, you can use your card as a free loan for holiday spending. This is recommended only if you pay it off before the interest charges begin.
7. If you carry a balance, calculate the cost of adding new charges to your credit card. This will probably serve as a wonderful deterrent to using your card. If you charge $1,000 on your credit card with an
   APR of 15%, and you choose to pay just $30 each month, it will take 44 months to pay off Christmas 2011 and you will pay an additional $302 in interest.
8. If you are going to carry a balance, contact your issuer and ask for a lower rate. They may not be as willing to negotiate as they were several years ago, but it doesn’t hurt to ask.
9. Use your rewards points for holiday shopping. These can be used to buy gift cards with many retailers. You can also apply your American Express Membership Reward points to shop at Amazon.com to pay in full or for part of your purchase.
10. Pay attention to partner programs. Most credit card issuers have a partner program that offers discounts or bonuses for online purchases with certain companies. The program varies by issuer, but the partners
    could be stores where you already shop. Discover turns $20 rewards into $25 gift cards. Citi gives an additional 1%-5% cash back when you shop at their online partners.

Original article: 10 Tips to Avoid Holiday Debt via LowCards.com, written by Lynn Oldshue.

Lynn Oldshue is a PR professional who has worked with the Birmingham Zoo, Coca – Cola , the Alabama Theatre, and the Saenger Theatre. She has covered personal finance issues for 10 years.

Photo: wowitsstephen

There are many reasons to be cautious — particularly when you’re on a limited income. However, once you graduate, it will be much harder to get accepted for your first credit card, say experts, so it’s a good idea to start with one now if you can.

“When beginning post-college life, it will be a great help to already have established a responsible credit track record,” said Gail Cunningham, Vice President of Public Relations at the National Foundation for Credit Counseling in an email. “For someone with no credit history [after college], even seemingly small steps, such as obtaining a credit card can be difficult, not to speak of buying a car or a house. [Without a credit history,] you may have trouble turning your dreams into reality.”

However, credit cards can quickly lead to financial disaster if you’re not careful, so it pays to be cautious. Here are eight do’s and don’ts to make sure you derive the full benefits from student credit cards and steer clear of the pitfalls:

DO:

• Get a student credit card. Anyone over 21 can easily compare and apply for a student credit card online or take advantage of mailed credit card offers. If you’re under 21, you must be able to show that you have enough income to pay the credit card bills or get someone to agree to be a co-signer on the card.
• Use the card to build your credit score. Your credit history tracks how well you manage credit. This history is recorded in your credit report, which forms the basis of your credit score. Establishing an excellent credit score will open doors for you in the future. It doesn’t just enable you to get approved for car loans or mortgages down the road. It will also make you look better to prospective employers. To build an excellent credit score follow the basics of good credit management: Pay all bills on time. Don’t carry balances above 30 percent of your credit limit and slowly build a solid long-term credit history showing you can manage a variety of credit.
• Start small. Most student credit cards come with a fairly low credit limit — sometimes as little as $300 to $500. It can be tempting to take out several credit cards to get access to a higher line of credit. However, juggling too many credit cards can get complicated fast and increase the likelihood of late or missed payments. That will hurt, not help, your credit score. “Ultimately, anyone seeking to build a high credit score will need at least three open and active lines of credit to have enough data to create a score,” says Cunningham. “But when you’re first starting out, it’s important to prove to yourself first that you can manage credit well before moving on to the next card.” Get into the habit of managing one credit card and learn the ins and outs of credit card use before adding another credit card.
• Ask for credit limit increases. Once you have paid your credit card on time for six to twelve months and otherwise used it responsibly, you may be eligible for a credit limit increase. Having a high credit limit makes it easier to build a good credit score. It will help boost a part of your credit score known as your credit utilization ratio, which is a measure of how much of your credit limit is available to you to use. How do you get a credit limit increase? After a year or so, simply call your card issuer to ask for one. In most cases, the customer service agent can give you a reply based on how well you have managed your credit card account. If they ask for permission to pull your credit report, decline it, as this will hurt your credit score. Instead wait, and call back six months later.

DON’T:

• Go for the first credit card offer you receive. You wouldn’t buy the first car you come across or marry the first guy (or girl) you go out on a date with. Credit cards are no different; it’s important to explore your options before applying. Building credit is a long-term process, so make sure the credit cards you take out give you the best terms possible. Compare mailed offers to student credit card offers online to see which offer the best deal. Then decide which to apply for.
• Mistake credit for cash. One of the most common mistakes people make when they get their first credit card is to treat their new line of credit like money in the bank. Part of building credit is to make sure your spending is in line with your income. Just because your friends can afford spending money on bars, spring vacations and frequent mall trips doesn’t mean you can afford it. Never use your credit card to pay for extravagances you wouldn’t otherwise be able to afford.
• Pay just the minimum. With credit cards, it’s a lot easier to lose track of your spending and slowly build up credit card debt over time. And don’t just think you will easily be able to pay it back once you graduate. “The biggest mistake many students make is that they get credit with the assumption that they are going to pay it back, when they graduate and get a good job,” says Sandy Shore, spokes person for Novadebt, a credit counseling organization in New Jersey. “So they are deficit financing and get out of college with credit card debt of $3,000 to $10,000, in addition to high student loans. But it’s not that easy to get a job these days, and many end up with high debt and no job.”
• Charge more than you can pay off in full every month. If you can’t pay it off, don’t charge it.

Finally, don’t neglect to learn more. When it comes to building credit, the more you know, the more you stand to gain. Continue to learn about credit cards and the basics of good credit management. Just like college, learning how to use credit is an important part of creating a foundation for a stable financial future. Five years from now, you’ll be glad you did.

Views expressed are the personal views of the author, and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.

The content of this article was courtesy of the National Foundation for Credit Counseling (NFCC) www.nfcc.org.  The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services. Springboard is an NFCC Member Agency.

Photo: hackny

Identity Theft Prevention Guide

Make your computer passwords stronger

While computer hacking is far from the most common way identity thieves operate, it’s still important to protect your identity online. Start by changing your online passwords to something that will offer strong protection of your data.

First off, you’ll need to create different passwords for your various online accounts. If your passwords are all the same, once a thief compromises you on one site, they’ll have access to your entire online identity.

Some people include part of the site’s name in their password; for example their password for ABC bank might be “PASSWORDABC” and their password for Facebook might be “PASSWORDFAC”. This is not a strong system. Hackers are sophisticated, and they’ll figure very quickly they can get into all of your online accounts with an easy change to your password at each site.

There are some other basic rules, like mixing letters and numbers, making sure the password is 14 characters or longer, never using dictionary words, etc. But a series of strong, unique passwords for all of your online accounts will be useless if you can never remember them.

One common piece of advice is to use a mnemonic device to help you remember your passwords. The famous “Roy G. Biv” acronym that helps schoolkids remember the colors of the rainbow is an example.  For a password, you want something that will let you use numbers as well as letters, and won’t involve a full dictionary word. Make it something personal to you so you’ll remember. “I wear size 10 shoes on my feet and size 32 jeans” might give you a password of “iws10somfas32j”. This is a good password in that it’s 14 characters long, includes alphanumerics, and doesn’t contain any dictionary words. Using your own actual sizes helps you remember the phrase, but it would still be impossible for a potential identity thief to guess.
To make a password even more complex, you could create a rule, like changing every letter “o” to the number “0”. So a mnemonic like “my son Max is 12 years old and my daughter Lily is 10 years old” would give you a strong 17-character password of “msMi12y0amdLi10y0”.

Once you’ve come up with a password like this, use Microsoft’s Password Checker to see if you’ve created a strong password.

If you must write your passwords down, don’t keep them near your computer. Lock them up somewhere secure where a burglar won’t be able to get to them during a break-in.

For more information, download our free eBook, “ID Theft: Protecting and Restoring Your Good Name,” or check out our online course on Identity Theft Prevention, available here in our FIT Academy. For more information about National Protect Your Identity Week (NPYIW) or to find a local PYIW event near you, visit ProtectYourIDNow.org.

Identity Theft Prevention Guide

Should I put a security freeze on my credit report?

One of the strongest tools a consumer can use to protect themselves against identity thieves is a security freeze. This will protect you from new fraudulent accounts being opened in your name.

If you place a freeze on your account, no unauthorized parties will be able to access your credit report. You will not be able to easily open new credit files or get new loans (or utility services, cell phone plans, etc.), and neither will potential thieves.

Depending on where you live, a security freeze may not be free, unless you are a recent victim of identity theft and have a police report.

Should you take this step? If you’ve recently suffered from Identity Theft, then the answer is yes, absolutely. If you haven’t been a victim but want to prevent ID theft, then you still may want to do so, but be aware that you’ll have to “un-freeze” your credit file if you plan to apply for a loan, new credit, or certain kinds of services. You may also have problems with applications for employment or insurance coverage that depend on a credit check. You can set up a PIN with each credit bureau to temporarily lift the freeze in these situations.

Be aware that temporarily lifting a security freeze carries a fee, so if you plan to do a lot of applying for work, credit, loans, etc., then you might want to wait before placing a security freeze on your file.

How to place a security freeze on your credit report

A quick and easy way to get started is to visit the credit bureaus’ web sites. They’ll provide more information about security freezes to help you decide whether you want to proceed. If you decide to go ahead with the freeze, you can complete the process at each bureau’s web site.

Experian’s Security Freeze Center

TransUnion’s Security Freeze page

Place or Lift a Security Freeze with Equifax

Be aware that the security freeze is different from a “Fraud Alert.” A fraud alert allows creditors to access your credit report, but alerts them to be on the lookout for fraud, so they should ask for more info before approving any applications.

Fraud alerts are free, and initially last for 90 days, but can be extended to 7 years. You should definitely take advantage of a fraud alert if you’ve been a victim of identity theft, if your wallet/purse has been stolen, or if you have other cause to believe someone may have accessed your identifying information. A fraud alert is a less radical step than a security freeze, allowing you to obtain new credit more easily, but lacking the level of protection afforded by a security freeze.

Experian’s Credit Fraud Center

TransUnion’s Fraud Alert Page

How to Set a Fraud Alert with Equifax

For more information, download our free eBook, “ID Theft: Protecting and Restoring Your Good Name,” or check out our online course on Identity Theft Prevention, available here in our FIT Academy. For more information about National Protect Your Identity Week (NPYIW) or to find a local PYIW event near you, visit ProtectYourIDNow.org.

Identity Theft Prevention Guide

Is a credit monitoring service worthwhile?

Credit monitoring services have popped up in response to identity theft, but it’s difficult to know whether these services are genuinely worth the cost.

There are credit protection services that aim to prevent identity theft from happening to you, and many even come with insurance to cover your financial losses. There are also credit monitoring services which promise early detection in the event your identity is compromised.

The cost of these services ranges from $8.25 per month ($99 per year) to $19.95 per month. This includes a well-known “Free” credit report monitoring service, which actually carries a $14.95 monthly fee.

Are these services worth the cost? It depends upon whom you ask. Some consumer advocates maintain that credit monitoring services are worthless at any cost. It’s certainly true that you can monitor your own credit by checking your credit reports for free at https://www.annualcreditreport.com, but you can only check each of your three credit reports once annually for free. That means you can get a free report every four months. Use of the paid monitoring services allows more frequent access to your credit information.

Even if there are legitimate credit monitoring services that will help you detect identity theft early, it’s very difficult to image a service that can actually prevent identity theft, when so much of the crime is out of your direct control. Some services help by providing anti-virus and anti-spyware software for your computer, and by opting you out of pre-screened credit offers. (You can opt out yourself, for free, by calling 1-888-5-OPT-OUT [1-888-567-8688].) Also, there are known “bad actors” in this industry who advertise “free” services only to sign up customers for a paid monthly subscription.

Ultimately, the question of whether these services are worthwhile depends on you. How important is peace of mind to you? Can you afford an extra $10 per month to be alerted to fraudulent activity a bit sooner?

We think that whatever you decide about credit monitoring services, exercise caution. Check out any company you work with through the Better Business Bureau and your state Attorney General’s office.
Be aware, however, that a promise to monitor your credit might be worthwhile, but a promise to prevent identity theft probably isn’t. And don’t be swayed by “million-dollar guarantees” or “identity insurance” policies. Identity theft costs you time, stress, and money, but nothing like a million dollars. Most credit card fraud carries a very limited liability to you ($50, which is usually waived by the creditor), so a “million-dollar guarantee” is an empty promise.

Our bottom line recommendation is that you start by monitoring your own credit by requesting your free annual credit reports at https://www.annualcreditreport.com. Only consider paid credit monitoring services if you’ve done thorough homework about the company you’re working with, and if the service is worth the cost to you. Think of credit monitoring like your tax return; you can prepare your own taxes for free, but for a fee you can hire someone to do it for you.

For more information, download our free eBook, “ID Theft: Protecting and Restoring Your Good Name,” or check out our online course on Identity Theft Prevention, available here in our FIT Academy. For more information about National Protect Your Identity Week (NPYIW) or to find a local PYIW event near you, visit ProtectYourIDNow.org.