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.

Related articles:

• Identity Theft Prevention Guide, Part Five
• Identity Theft Prevention Guide, Part Three
• Identity Theft Prevention Guide, Part Four
• Identity Theft Prevention Guide, Part One
• Identity Theft Prevention Guide, Part Two