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Credit insurance is something that most major credit card companies offer... ...more
When you get your next credit card, you will have to decide on several extra services. Most experts recommend that you do not order these extra services. Life insurance on the credit card, for example, should not be necessary if you have proper life insurance coverage in general. You should also say no to job loss protection services, as your emergency fund should cover periods of job loss.
Yet there is one type of protection you might be more prone to consider, and that is identity theft protection. Identity theft is a very real problem in today’s world, and it can have devastating consequences to those who fall victim to an identity thief’s tricks. So should you pay the credit card company for identity theft protection?
Look for Cards with Built-in Protection
Remember that the current economic situation is hurting credit card companies, and as a result they are starting to offer more and more incentives to good customers. If you have a good credit rating, you will probably be able to find a card with built in identity theft protection. In this case, you will not have to pay for it at all.
Know What Coverage Is Begin Offered
If you are considering identity theft protection, make sure you know what coverage is really being offered. Some credit card companies offer affordable identity theft protection, but they will not actually reimburse you for any stolen money. Instead, the coverage simply pays for the expenses you will take on as you try to get the mess straightened out after you discover the theft. Often, these problems are not discovered until thousands of dollars have been lost. You will still have lost that money, even with protection.
Also, dig into the service to find out what is monitored and how you will be contacted. If you are going to pay for credit protection, you need to know that you will be notified instantly if something goes wrong. If the fine print is confusing, call the customer service account to talk to someone so that you can learn exactly how the service is designed to work.
Consider Outside Insurance
Instead of paying for insurance with your credit card company, consider paying an outside company for identity theft insurance. Again, you need to read all that is covered in the policy, but this is a better way to protect your money. Not only will that particular credit card account be protected, but so will your other bank accounts and credit cards. This may end up being more cost effective than paying for protection on each account individually.
For most consumers, the amount of protection they will get from the credit card company for $10 or so a month is simply not worth the expense. There are many other ways to protect your financial situation from the actions of credit card thieves. Before you sign up for seemingly important credit card fraud protection, learn what is covered and what your other options are. You will likely find that paying for outside identity theft insurance is a far more affordable option.
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A favorite method of stealing identities that thieves have been utilizing over the past few years is called “vishing”. Vishing is when someone calls you on the phone, misrepresents themselves as somebody else, and misleads you into providing personal information.
Comment by Preventing identity theft — November 23, 2009 @ 4:49 am