Is Paying for Identity Theft Protection Worth It?

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Jun 01, 2017

Identity theft is a growing problem in the United States, and dozens of companies offering various forms of "identity theft" protection have sprung up to combat it. Unfortunately, these services do little to protect people's identities, according to a study released by the U.S. Government Accountability Office (GAO).

An identity protection company will typically charge $10 to $20 a month to monitor changes in a person's credit reports and public records that could indicate someone has either exploited existing accounts (such as credit cards) or tried to open new accounts in their name (such as loans). However, these services often amount to just notifying a person promptly after their identity has already been stolen, the GAO said.

Both the GAO study and consumer protection organizations, like the Identity Theft Council, point out that consumers have more effective, low-cost methods to protect themselves from identity theft. Here are some of their tips:

Monitor your own credit. You can get a free credit report from each of the three credit reporting agencies once a year at You can stagger your request from each agency so that you can check your credit history for any suspicious new account openings every four months.

In addition, one of the most effective things only you can do yourself is to scan your monthly credit card and bank account statements. If you see any irregularities, contact the financial institution at once and let them know if you believe the charge is the result of identity theft.

Place a fraud alert. You can place a free fraud alert on your identity if you believe you have become vulnerable for any reason, either because you lost your wallet, had your home or car broken into, or had your information stolen online. All you need to do is call any of the three credit reporting agencies (Equifax 1-888-766-0008; Experian 1-888-397-3742; or TransUnion 1-800-680-7289) and they will notify the other two.

Placing a fraud alert lasts for 90 days and means that any credit provider will have to take extra steps to verify the identity of any person claiming to be you who tries to use your credit and open new accounts. It can be renewed for free every 90 days.

Freeze your credit. If you are not going to be applying for new credit for a while, one of the most effective things you can do to combat identity theft is to put a temporary freeze on your credit. You will have to call each of the three credit reporting agencies and pay a small fee ($5 to $10 each) to freeze your account, after which no one will be able to access your credit to open new accounts. It will not affect your credit rating or your ability to use your existing accounts.