In an age when data breaches seem to occur frequently, credit monitoring looks increasingly appealing.
Credit monitoring services track your credit accounts with the goal of catching any fraudulent activity soon after it occurs.
Typically these services are offered for a fee on a subscription basis.
"Credit monitoring is buying peace of mind, which may be worth the money to some people," says Gail Cunningham, spokeswoman for the National Foundation of Credit Counseling.
Credit monitoring services can alert identity theft and fraud victims when new accounts are being opened in their name, or when old accounts are being used to purchase items fraudulently.
In some cases, monitoring services also offer other features, including:
- Free access to your credit report and score
- Financial education tips
- Financial calculators
- Tracking of your Social Security Number to make sure it is not being used fraudulently
- Assistance if you become a victim of ID theft
How to get credit monitoring
You can purchase credit monitoring from a company that provides the service. Costs vary widely, with some topping $15 a month, according to the Consumer Financial Protection Bureau.
In some cases, you may be able to get credit monitoring services at no charge.
"Many companies experiencing a breach offer that service free of charge to their customers who were affected," Cunningham says.
Critics sometimes say that credit monitoring is not worth the cost. But Cunningham says certain groups of vulnerable people should consider signing up for credit monitoring.
"Victims of ID theft should certainly consider credit monitoring," she says.
Some people may prefer to skip the cost of credit monitoring and take a DIY approach instead. While this is possible, it does not always work out well for individual consumers, Cunningham says.
"The problem is that they are often well-meaning, but may not follow through and consistently check their accounts," she says.
If you decide to try the DIY approach, make sure you have online access to the account statements of all your credit card and checking accounts, Cunningham says.
Regularly review the accounts and look for any unusual activity.
"If the bank offers alerts, also sign up for those," she says. Be sure to check if these credit alert services are free or if they require an additional fee.
Not a cure-all
Even if you sign up with a credit monitoring service, do not expect it to work miracles.
Cunningham points out that credit monitoring services alert you to fraudulent activity only after it has occurred.
"Consumers need to be aware that it is not possible to prevent all ID theft," Cunningham says.
Still, these services can help mitigate damage once your accounts have been breached.
"It allows you to promptly address the problem before further damage can occur," she says.
If your credit monitoring service detects fraudulent activity, it will alert you to the fact.
At that point, it is up to you to protect yourself. The Federal Trade Commission recommends that you:
- Place an initial fraud alert
- Order your credit reports
- Create an identity theft report
Find out more at the FTC website.
So, to answer the question in the title of this article: yes, credit monitoring does make sense.
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