Clark Howard's Tips

65 million paying for credit monitoring/fraud alert services

June 17, 2008

Syndicated financial writer Kathleen Pender has calculated that 65 million Americans are paying for credit monitoring or fraud alert services right now. That's about 1 in 4 adults! These "services" can cost you from $6 to $15 per month. They're marketed very effectively on radio, TV and the Internet and try to play on your fear.

But the real problem is that fraud alerts are routinely ignored. And with credit monitoring, you'll only learn after the fact if unauthorized lines of credit are opened in your name.

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In reality, there's only one effective way to prevent criminals from using your credit to make purchases. It's called a credit freeze and Clark has prepared a guide to help you navigate the process of applying for one.

With a credit freeze, you shut down a criminal's ability to do anything with your info -- even if it should be compromised. That's because you get a secret code that only you know. The one-time cost of a credit freeze varies by state from free to $10 per credit bureau.

Compare that to a monthly fee for monitoring or reporting! Should you have to apply for new credit, you'll need to "thaw" your records. Again, the cost will be from zero to $10 per bureau.

Many talk-show hosts are currently doing spots for one popular credit monitoring/fraud alert service called LifeLock. While this is a legitimate company, Clark wants to emphasize that you shouldn't waste your money.

Our senior producer Kim froze her credit with all 3 bureaus. She used the info contained in Clark's guide and found the whole process only took her about an hour. It's all been very painless so far; she didn't even need to thaw her credit when she opened a new checking account or switched her auto insurance.

More Clark Howard Credit and Banking Tips The dangers of home-equity borrowing  ID checks, minimum purchase rules a no-no with credit cards  The Mortgage Lender Implode-O-Meter  Advance-fee loans are back with a vengeance  Wachovia, WaMu say goodbye to option payment loans  Cycling your unused credit cards back into the mix  Banks offer diverging interest rates on savings and CDs  Mortgage bailout proposal to help banks, not homeowners  Credit limits being reduced without your knowledge?!  65 million paying for credit monitoring/fraud alert services  Full list