Identity theft is something that many people have to deal with today. Credit cards remain one of the most common means of identity theft. How big of a problem, however, is identity theft? Are there other places where we might be in danger?
Alex Cook from Wealth with Purpose says that while identity theft has been a problem for a long time, it has really exploded in the past few years. It is estimated that more than $400 billion is now lost to cybercrime each year.
Beware of identity theft
“It’s a huge problem,” says Alex. “People used to steal mail from mailboxes to try to get people’s identities. Now, this is mostly done through people clicking on links, or when a major website is hacked and people’s personal data is stolen.
Alex thinks it’s dangerous to think it won’t happen to you. Identity theft can have a huge impact on your life and affect your ability to apply for a loan or mortgage. There is also a risk that the bank will not compensate you for your loss, so it is essential that you know how to protect yourself.
According to Alex, credit cards are much more problematic than debit cards. He says this is something we need to monitor by checking our statements and looking for any irregularities. “A lot of people never check their statements, and I would encourage them to be a little more diligent.”
Sign up for credit alerts
Another thing we can do is sign up for a credit alert system like Equifax. “What these agencies do is alert you if someone takes out credit on your behalf. It’s a very inexpensive type of service, and I personally use it because I want to know immediately if there’s a problem.
Everyone is assigned a credit score, and it is an important factor that is not only used by banks, but also by other loan providers. “They want to make sure you’re up to date on all your payments,” says Alex. “If you’re behind on anything, they’ll see it. You should check that there are no errors or defaults.’
Alex says another thing you can do to protect yourself is to use different passwords for each site. “I recommend you use a password manager,” he says. “Because hackers break into well-known websites. Big companies get hacked from time to time and then they will have your email address and password.
Check your statements
Many companies now use the two-factor authentication system. When you access websites, not only do you enter a password, but you also enter a code. So it is very difficult for anyone to access a website without your information unless they also have your mobile phone.
Along with diligently checking your statements, Alex says to also make sure to shred any personal documents you need to dispose of. Do not put items in your trash containing personal information that could identify you.
Simple steps to reduce risk
“You can significantly reduce your risk by taking a few simple, inexpensive precautions,” says Alex. “We all use the internet and buy things online, but you don’t actually need a credit card. A debit card is more than enough.
“Most advisors will say they have between 3 and 6 months of living expenses set aside in cash,” says Alex. “Emergency funds are the best way to have cash ready for that rainy day.”
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