Protect yourself against identity theft

Have you protected yourself against financial identity theft?

 

While the odds are very low that you’ll be victimized, it’s worth taking a little time to reduce your chances of someone stealing your personal information. Thieves may then apply for a loan or credit card in your name. When the bad guys don’t pay the bills, lenders start calling you and the delinquent accounts appear on your credit report. 

 

According to the Federal Trade Commission (FTC), 8.3 million American adults, or 3.7 percent of all American adults, were victims of identity theft in 2005. The FTC states that while some identity theft victims resolve their problems quickly, it usually takes time and money to recover your good name and credit record. 

 

Identity thieves often target your Social Security number and credit card numbers. The FTC cites the following as the most popular ways thieves get this information:
- Dumpster diving. They rummage through trash looking for bills or other paper with your personal information.

- Skimming. They steal credit or debit card numbers by using a special storage device when processing your card.
- Phishing. They pretend to be a real bank or company and send an email request for your personal information.

- Changing your address. They divert your billing statements to another location by completing a change of address form.
- Simple stealing. They steal wallets, purses, mail or similar items that contain your personal information.
 
To protect yourself, take these simple steps:
- Shred financial documents and paperwork with personal information before you discard them.
- Don’t carry your Social Security card in your wallet or write your number on a check.
- Don’t give out personal information unless you know for certain who is asking.
- Use firewalls and anti-virus software to protect your home computer.
- Monitor your accounts and bank statements each month, and check your credit report on a regular basis. Consumers are allowed by law to receive one free credit report per year from each of the three credit reporting agencies: Equifax, Experian and TransUnion. To get your free reports, visit
www.AnnualCreditReport.com or call 1-877-322-8228.

 

Private companies offer credit monitoring services, ID fraud prevention and identity theft insurance. Some people believe these services offer peace of mind; others believe such services offer little real protection and nominal help should you become a victim. Before committing to any service, conduct a little online research and read each company’s fine print.

 

Consumer Reports is skeptical of such services and has published a fine article explaining how to prevent identity theft, outlining steps you can take either for free or for less than what a private company might charge. For example, the article notes that for about $30 you may ask the national credit reporting agencies to place a “security freeze” on your credit. This prevents anyone from looking at your credit report, except for the government or companies that already have a financial relationship with you. Lenders who can’t pull your credit report aren’t likely to grant new credit to someone else in your name.

 

For more information on how to protect yourself — or if you’ve recently been a victim of ID theft — visit the website of the U.S. Federal Trade Commission.

On “No Interest” Credit Card Claims

Have you been tempted to make a large purchase because a store will issue you a credit card with “No Payments and No Interest” for six or 12 months – or longer?

 

It sounds like a great deal: you buy something now, and you have a long time before your first payment is due.

 

Be careful! While you are not REQUIRED to make any payments during this time, the waiting may indeed cost you – in interest – unless you pay off the ENTIRE balance before your promotional period ends.

 

The devil is in the fine print. For example, my new credit card agreement with Home Depot (one of my favorite stores) says I don’t have to make any payments for nine months after my initial purchase using the card, and “No finance fee will be imposed on this balance if you pay the amount of the balance in full within the promotional period.” However, the agreement then states “If you do not pay the balance in full prior to the expiration of the promotional period… finance charges on this balance will be imposed from the date of purchase until the balance is paid in full.”

 

In other words, if I pay off the entire balance before my nine months is up, I indeed avoid paying any interest. No problem.

 

However, if I don’t pay off the entire balance by the end of the nine month promotional period, then I’ll be responsible for paying principal plus interest for the entire promotional period – the very “grace” period I thought I was getting interest free! This is true even if I’ve paid all but a single dollar before the promotional period ends… that one dollar is enough to trigger the acceleration of all that interest. 

 

It’s important to note that Home Depot told me this up front: a store manager explained it all before I signed for the card. And I indeed will pay my card off long before nine months, to avoid any interest.

 

Other stores, however, may not be so candid, because they’ll get more from you in the end if you don’t make any payments during the promotional period, allowing the customer to focus on the “No Payments Required” pitch. I’ve checked several large chain stores, and they all have similar language. No wonder they give you a year or more to begin required payments: the longer the promotional period, the more interest you may be blindly accruing.

 

The lesson: be careful with credit cards, particularly those with “No Payment and No Interest” claims – and lots of fine print.