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Advice from Credit Craig

How to Handle a Data Breach

In the world today, technology use is a part of most day-to-day activities.  Most banks have apps for mobile banking and stores have apps for convenient shopping.  With this convenience, however, comes a certain amount of  danger when entering your payment and personal identifying information, then saving your information for future transactions. 

 Earlier this month, Equifax announced hackers stole more information than previously reported, affecting approximately 2.4 million Americans. Below are steps essential to protecting yourself from the consequences of data breach and identity theft, and what to do if you become a victim.

It is always a good financial habit to monitor your credit report regularly throughout the year. Reports can be accessed at no cost on the www.annualcreditreport.com.  This website allows viewing of your credit report from each of the three bureaus once every twelve months.

It is also a good idea to frequently monitor your checking and savings account activity. This is one of the best ways to find out if someone is using your personal information to access funds.  Most banks and credit unions allow account holders to set passwords and add additional security measures to help reduce the chance of unauthorized transactions.

When it comes to shopping online, many retailers encourage shoppers to store credit cards, passwords, and other personal information online.  We, however, advise against this and encourage you to keep your passwords safe at all times. 

Time is critical when reacting to identity theft or credit fraud of your credit cards, checking accounts, and savings accounts.  Take advantage of email and text alerts that notify you as soon as transactions are processed and respond quickly as needed.  With alerts in place, regular review of monthly statements, and quick response to suspicious activity, you have a good start on prevention.

In the event you become a victim of identity theft or a data breach, financial institutions are required by federal law to inform their customers of any known breach activity.

You should be notified by email or postal delivery with details of the time the incident may have occurred and details about your exposed personal information. Currently,  46 states have laws requiring other types of businesses to take similar action.

Account Passwords

  • Immediately change affected password and consider using a different password than all your other accounts if you’re not already doing so.
  • Avoid using simple passwords or those that may be easy to figure out, like “12345” or “abcde,” your birthday or other numbers that may reflect your phone number or address, etc. Always include a variety of letters, numbers and non-alphanumeric characters whenever possible.


Your Credit Card Account Number

  • If you have a technology enabled account that allows you to remotely control your credit card via an app, you’ll want to use that feature to lock access to the card.  Following a major data breach, your credit card company may automatically send you a new card as a proactive measure. It is a good idea, though, to contact the credit card issuer to request a new card and account number.  Keep in mind that you are not liable for any authorized purchases under the Fair Credit Billing Act


Your Debit Card Number

  • You are not liable for any unauthorized transactions if you report them to your bank or credit union within sixty days of receiving your statement.
  • Immediately change your personal identification number (PIN) and cancel the card.
  • Don’t take any chances if your checking or savings account number was exposed; request a new account with a different number.
  • Request additional layers of security such as verbal passwords and photo identification.  This prevents your bank or credit union from discussing your account with anyone unable to provide the correct password or match your photo on record.


Your Social Security Number (SSN)

  • Place a fraud alert on your account by contacting one of the three major credit bureaus: Equifax, Experian or TransUnion.
  • The credit bureau you contact will then reach out to the other two agencies to inform them of the fraud alert.
  • The fraud alert cautions lenders to take extra care verifying personal information before issuing credit and entitles you to a free credit report from each agency after the alert is in place.
  • Although not an ideal solution for every circumstance, consider placing a credit freeze on your account. Once in place, a freeze will prevent a credit bureau from releasing your report or score without your permission.

Some companies offer free access to credit monitoring services when notifying customers of a data breach. These free offers are typically time sensitive and the service converts to a fee-based program after one to two years.

Having your data stolen, or at risk of being used for theft, is very stressful. You may consider taking advantage of a monitoring offer while you don’t have to pay anything for the product. 

Be Wary of Credit Card Offer Perks

Competition among credit card issuers means good news for consumers. This has spurred an uptick in big sign-up bonuses, including cash-back offers and travel rewards.

So should you pounce on all these generous offers? It depends. “For some people, some of these perks make sense,” says credit card expert John Ulzheimer, formerly of Equifax and FICO. “For other people, they don’t.”

Basically, whether these deals can benefit you depends on how you use credit already. For example, many sign-up offers require you to spend $3,000 to $4,000 within 90 days of your opening the account to get the bonus. If you typically charge that much – and pay off the balance in full every month – then this deal makes sense for you. “In the short term, it might hurt your credit [score] a tiny bit, but in the long term, as long as you’re keeping your credit utilization at a reasonable level and making the payments on time each month, having three or four credit cards is not a problem,” Matherson says. “In fact, it can be a very lucrative strategy.”

 

But if you rarely use your card, increasing your card usage just for the bonus can be dangerous. You can easily wind up with more debt than you can manage. “The worst thing you can do is carry a balance on these cards because you’re subsidizing the rewards program for you and someone else,” Ulzheimer says.

And remember that there’s more to a credit card than just a sign-up bonus. You also need to understand the ongoing terms of the card before you apply. Consider the annual and monthly fees, annual percentage rate, penalty charges and any ongoing rewards, Gonzalez says. If you’re not careful, you could wind up paying more in fees and interest than you stand to earn in rewards.

“To the extent [initial perks] benefit you, that’s great,” Ulzheimer says. “But never lose sight of the fact that all of these perks are carefully designed and marketed for the purpose of pulling you in.”

 

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