Are credit monitoring services worth it?

KNOXVILLE (WATE) – After constant reports of identity theft and security breaches, you have more than likely read, seen or heard advertisements about credit monitoring and identity theft protection services. For about $10 a month, you get access to your credit report and score, as well as a weekly email outlining any activity on your credit account. But do you really need that layer of protection?

Americans shell out billions annually to protect against all manner of evil – some real, but much of it greatly exaggerated. Credit monitoring is a $3 billion business, with millions of Americans paying for protection against identity theft, as well as greater access to their credit histories and scores.

Here is one little known fact: you’re not liable if someone opens credit in your name. We’ve all read stories of how the cost of credit fraud, like shoplifting, is passed along to you in the form of higher prices. It’s important to remember that if someone forges your signature on a credit application, or check, you are generally not responsible. The law limits your liability on stolen credit cards to $50, and virtually all card issuers waive even that.

Monitoring your credit is marketed as if it’s a burglar alarm that keeps bad guys out, but what it more closely resembles is an alarm that’s tripped, as the bad guys are leaving with your stuff. Credit monitoring doesn’t prevent identity theft. By definition, credit monitoring can only monitor transactions that have occurred, which isn’t the same thing as prevention.

Now if the thief isn’t caught that used your card, it’s a problem for the institution, or business, that accepted the fraudulent charge, not you. So that’s another reason to consider whether you want to pay for these services.

If you really want to prevent crooks from making off with your identity and going on a spending spree, it isn’t hard to do, and it doesn’t cost a dime. Just put a fraud alert on your account. According to Experian, fraud alert messages notify potential credit grantors to verify your identification before extending credit in your name in case someone is using your information without your consent. So, it costs nothing, and there aren’t a lot of hoops to jump through.

Another reason not to pay for protection is it costs too much. You can get a free credit report once each year from each major bureau at annualcreditreport.com.

Paying to have your credit monitored is a good educational experience. Perhaps the single biggest reason to use credit monitoring is that you’ll receive an incredible amount of credit education simply by staying on top of your credit. The mere act of constantly reviewing your credit files and being aware of changes to your credit profile promotes financial literacy and better credit awareness.

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