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Credit Freeze Laws Protect Credit Card Deals from Identity Theft

2007-10-16

Believe it or not, identity theft is the fastest growing financial crime. Annually, millions of Americans fall victim to ID theft. It costs nearly $50 billion for businesses and credit consumers. Although most credit card companies adhere to security practices and employ up-to-date technologies to protect their customers from ID fraud, credit users don't feel completely secure against it. Fraud alert systems are not a cure-all in certain situations. Besides, it is activated for 90 days only. And endless phone calls to approve opening credit account may drive you mad. Meanwhile, the ability to freeze your credit report seems to be a good opportunity to protect credit card deals.

With a credit freeze, it is next to impossible to have access to your personal data. It functions like a safety lock, your credit report will be locked or frozen. In other words, it eliminates a possibility of ID theft. A security freeze appears to be a very effective tool to guard your credit card deals. Still, there are some arguable points.

A couple of years ago this tendency of security freezes was not so widespread. The point is that not all 50 states have adopted credit-freeze laws yet. The good news is that pretty soon all American cardholders will be able to use this option of credit card protection. The key factor is the effective date of law. And while the vast majority of states take advantage of this law, the others will wait for their turn.

Another problem is a fee. For non-victims, it will cost about $10, and for those people who suffered from ID fraud, it will be for free. Again, the fees differ from state to state, and you should inquire about this point. It's worth saying that there are fees for removal of this option in some states. Generally, it's about $8.

Credit bureaus and credit card companies argue about potential benefits of credit report freezes. First and foremost, it will be inconvenient for customers to make their credit card deals. According to credit-freeze laws, you can unlock your report but it will take about three days.

Meantime, you may miss out on that one-time low interest credit card offer or a mortgage with attractive terms, not to mention a new car purchase. Specialists acknowledge the fact that such safety measures are mainly for people with self-sufficiency, who are not likely to anticipate alluring credit card deals.

Probably, the best example of such people can be seniors, whose credit needs are not so high. "I don't carry a balance on my credit cards," says David Hiller, 55. "I've settled down my life and at my stage of life I don't want to go through identity theft." By the way, credit-freeze laws of some states imply no fees for seniors aged 62 and older.

So, take your choice! If your aim is a good credit history and the best credit card deals, you may find this option rather embarrassing. And if you give priority to security and safety, then credit report freeze is the best solution of this problem.

However, our attempts to find the most effective tool preventing identity theft may have unexpected consequences. When we care about safety, we miss the opportunity to make the most tempting credit card deals and build credit history. Thus, it's up to you to set priorities and decide what is best for your financial well-being.

I am really afraid of identity theft, so I am going to consult my bank about the credit freeze option.

I hope, credit card companies will invent something better than credit freeze, as it doesn't seems to be an effective service. I mean, if I lock my credit report, I can miss beneficial credit card deals. But when my credit report is unlocked, I can't feel quite safe. So, how can I benefit from this credit freeze?

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