In this world where every swipe of your credit card and every online transaction could put your information in the hands of identity thieves, a credit freeze might not seem like the worst idea. It will stop fraudsters from opening new lines of credit in your name while still enabling you to take out loans and new lines of credit as needed.

But there are several drawbacks to freezing your credit that most people don't realize. Here are a few things you should know before you make that call.

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How credit freezes work

If you decide you want to freeze your credit, you must contact the three credit bureaus and notify them of your wish to do so. They will essentially lock down your credit reports, so no new creditors can view them unless you provide them with the special PIN that the credit bureaus give you. Your existing creditors will still have access to your reports.

The freeze will stay on your credit report until you contact the credit bureaus and request that it be removed. Freezing your credit will not hurt your credit score, though it could make getting new credit more challenging.

Drawbacks of credit freezes

Every time you want to view your credit reports yourself or allow a creditor to do so, you must provide your PIN. If you lose track of this number, your creditors will be unable to view your report and will likely deny your application, since they can't assess your creditworthiness. You can still get the credit freeze lifted, either temporarily or permanently, but you must go back to the credit bureaus and fill out additional paperwork to prove that you are not an identity thief.

In the past, you also had to pay for credit freezes and unthaws. But as of September 21, 2018, the credit bureaus are now required to offer you these for free.

Perhaps the biggest downside to credit freezes is that all of the hassle might not stop identity thieves. While a freeze will most likely prevent them from opening new accounts in your name, it cannot prevent fraud on your existing accounts. If thieves get hold of your credit card number, for example, they can still run up a bunch of charges in your name, credit freeze or no.

When to consider a credit freeze

Credit freezes aren't a good fit for most people. Unless you've been a victim of widespread identity theft -- that is, someone's tried to file a tax return and open several new accounts in your name -- a credit freeze probably isn't worth all of the hassle.

If you've only had your credit card stolen or the thief has only opened a single account, you can probably handle it without a credit freeze. Notify the financial institution and the credit bureaus to get the fraudulent accounts removed from your credit report. If it's a simple case of credit card theft, your card issuer will probably just cancel the card and send you a new one.

Whenever your identity has been stolen, it's always a good idea to pull your credit reports and check for other fraudulent accounts that might have been opened in your name. Then, if you think it's necessary, you can place a fraud alert on your credit reports.

Unlike credit freezes, fraud alerts are free, and they don't require you to remember a special PIN. Instead, they put an alert on your credit reports that notifies creditors that they should take additional steps to verify your identity before approving any new loans or lines of credit.

You can put a fraud alert on your credit reports by reaching out to the credit bureaus and requesting it. The alert will last for 90 days from the date that it is first placed on your report, and then it will expire. You can renew it if you choose.

Credit freezes can help keep you safe from identity thieves, but that security comes at a price. For most people, it's not worth it. Instead, monitor your credit reports closely for fraudulent activity, and if you notice any, put a fraud alert on your report instead.

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