Now that the dust is settling on the Equifax data breach and we are left wondering how to handle the risk of identity theft, let’s consider the best ways to move forward and maintain our financial peace. To put things into perspective, see those adorable little ducklings above? If they represented the United States, two out of the three of them just had their personal data stolen. Sorry, am I being melodramatic again? First, before we face the truth, let’s take a moment to breathe … OK, that’s better. Now, I think it’s time for all consumers to take action. Even before this hack, many experts said that it’s not really a matter of IF you will have your identity stolen, but WHEN. So what do you do?
I’ve been curating the internet for salient and applicable advice. The following options are ordered from least expensive to most expensive, but as I always say, sometimes it’s not about the money. Factor in your emotions, your energy, your time, and your peace of mind before making a decision that works best for you.
Fraud Alert – free, but temporary
You can request a Fraud Alert with one call to one of the bureaus. This is really designed to protect those who have already been victims of identity theft, but anyone can request an initial alert which will last for 90 days. If you prove you have been a victim of identity theft by filing an Identity Theft Report with the FTC, the alert will last seven years. It won’t prevent new accounts from being opened in your name, but it advises potential lenders to verify the consumer’s identity before taking action.
The upside to an alert is it won’t take much time, especially since the bureau you notify will be required to pass the information on to the other two main bureaus. But the downside to this method is it’s neither long-term nor proactive. It’s helpful AFTER the identity theft has already happened.
Credit Freeze – About $30 initially, and another $5-$10 whenever you have to apply for credit (costs vary by state).
With the data that was stolen affecting more than half of the nation, we can expect an increase in fraudulent opening of new credit accounts. The surest way to prevent that is with a credit freeze, but it comes with its headaches. First, you have to contact each of the three credit bureaus separately to initiate the freeze, then you have to pay a fee of up to $10 (although Equifax is waiving that fee at the moment, such largesse! … eye roll …) Once your credit is frozen, you can not apply for any home rentals, credit cards, loans, mortgages, new utilities, or mobile phone services without thawing your credit. The good news is you can ask the lender which bureau they use for credit checks, and then you can thaw your credit with just that bureau for another fee of up to $10.
Since we talk a lot about financial wellness around here, the hope is that you are sufficiently financially well to weather any urgent storms that come about. That way, applying for additional credit is NOT one of your financial coping mechanisms. In that sense, this method is great because it locks down your credit so you have control.
As a flawed human being however, I have one major concern with this method. The key to thawing your credit is keeping track of your unique PIN number with each bureau. I’m just thinking, where do you write THAT one down? Heaven forbid there’s a fire, and you need to rent a place to live, but your PIN went up in flames? I don’t have an answer for that yet, except keeping your PIN in the cloud … but somehow that seems to defeat the purpose … Maybe I’m too old fashioned, but those password programs that remember your passwords for you seem similarly risky in the event of a breach. Equifax was supposed to protect us, and now look what they’ve done!
Last tip on credit freezes, don’t let a persuasive credit bureau try to talk you out of it. When you freeze your account, they can no longer sell your information to companies offering pre-screened credit offers. So they have a vested interest in talking you out of a freeze. Stay strong.
Identity Theft Protection Insurance – $6.75 – $29.99 per month
Remember the rules of insurance: you cover the risks that are most likely to happen and where the premiums are affordable. ID theft just skyrocketed to the top of the list of risks that are probable. While we think of these policies as protection, their real value lies in their promise to restore your credit and make up for any losses when – not if – you become victim of identity theft.
I should pause here and remind you that I don’t make any money on these recommendations, I’m literally doing the research for my own family and sharing my discoveries.
So when I say it’s probably time for this insurance, I’m serious. Here is a helpful, independent tool to compare the policies out there. I am choosing Zander because the family plan is so cost effective. Since we are looking at this becoming a permanent expense (unless we figure out a way to protect our online identities while still maintaining the convenience of banking and shopping online), it’s important to keep costs down.
Of course, feel free to combine the steps above. I know Zander recommends the Fraud Alert in addition to their insurance coverage. Some may go so far as to get the premium insurance package to protect current accounts AND freeze their credit to make it doubly difficult for thieves to be successful. Either way, do something. It’s time to get your ducks in a row.