Identity theft is something that many people have to deal with today. Credit cards remain one of the most common ways that people’s identities are stolen. How big of a problem, though, is identity theft? Are there any other places we could be at risk?
Alex Cook from Wealth with Purpose says that while identity theft has been a problem for a long time, it has really exploded over the past few years. It’s estimated that over $400 billion is now lost every year in cybercrime.
Beware of Identity Theft
‘It’s a massive issue,’ says Alex. ‘People used to steal mail from letterboxes to try to get people’s identity. Now it’s mostly done through people clicking on links, or when a major website gets hacked and people’s personal data is stolen.’
Alex believes it’s dangerous to think it won’t happen to you. Identity theft can have a massive impact on your life, and affect your ability to apply for a loan or mortgage. There is also a risk that the bank won’t compensate you for your loss, so it’s vital that you know how to protect yourself.
In Alex’s opinion, credit cards are much more problematic that debit cards. He says it’s something we need to monitor by checking our statements and looking for any irregularities. ‘A lot of people just never check their statements, and I would encourage them to just be a bit 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 in your name. It’s a very low cost type service, and I personally use this because I want to find out immediately if there’s a problem.’
Everyone has a credit score assigned to them, and it’s an important factor that is not only used by banks, but also other lending 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 need to check that there’s no errors or defaults.’
Alex says another thing you can do to protect yourself is to use different passwords for every site. ‘I recommend you use a password manager,’ he says. ‘Because hackers break into well-known websites. Big companies do get hacked occasionally and then they’ll have your email and your password.’
Check your Statements
A lot of companies are now using the two factor authentication system. When you’re accessing websites, not only do you enter in a password, but you enter in a code as well. It makes it very difficult for anyone to access a website without your information, unless they have your mobile phone as well.
Apart from diligently checking your statements, Alex says to also make sure you shred any personal documents that you need to dispose of. Don’t put things in your garbage bin that contain personal information that could identify you.
Simple Steps to Reduce Risk
“You can reduce your risk significantly by taking some simple, low cost precautions,’ says Alex. ‘We’re all using the internet and buying things online, but you don’t actually need a credit card. A debit card is more than sufficient.’
‘Most advisors will say to have somewhere between 3 to 6 months’ worth of living expenses set aside in cash,’ says Alex. ‘Emergency funds are the best way to have money ready for that rainy day.’