Should You Cancel Your Credit Card After a Data Breach?

The term "data breach" can be scary, but it's important to know exactly what you're dealing with.

Credit card data breaches are in the headlines far too often these days. In 2020 alone, there were 1,108 data breaches in the United States, and this was fewer than in previous years. Perhaps the most notorious incident was the breach on credit bureau Equifax in 2017, which exposed personal data of 143 million people, including information on hundreds of thousands of credit cards.

More recently, late 2021 cyberattacks on several popular sporting goods sites saw 1.8 million customers' payment information compromised. And just this past October, U.S. Bank revealed that about 11,000 customers had their identifying information accidentally shared by a third party vendor.

The point is that data breaches are very common, and come in various forms and sizes. But when a credit card number or other sensitive information is affected by a data breach, it's important to do some damage control, but it's also important not to panic.

Steps you can take after a data breach

To be perfectly clear, data breaches should be taken seriously. If you find out that your Social Security number and/or credit card account numbers were stolen or exposed, it does open you up to identity theft. However, closing your credit card account usually isn't necessary, nor is it the most effective remedy. After all, if a thief has your Social Security number, the bigger worry is new accounts being opened in your name, not that they'll use your existing credit cards for fraudulent purchases.

With that in mind, here are some things you can do to protect yourself after a data breach. Keep in mind that not all of these will apply in every situation, but these are some of the tools at your disposal.

Request a new credit card

Most credit card companies will do this automatically if they are breached. But if a third party (like a retailer) suffers a data breach where your credit card information is stolen, you might want to report the card stolen and request a new one, with a new credit card number. To be clear, there's no need to cancel your account. Getting a card with a new number makes the old one useless to a thief.

Utilize credit monitoring

In most cases, when a company is responsible for a data breach, it offers free access to an online credit monitoring service for a certain length of time. (Note: It's not a bad idea to enroll in a reputable credit monitoring service even if you haven't been affected by a data breach.)

Place a fraud alert on your credit

If information beyond your credit card number has been exposed, such as your Social Security number or date of birth, a fraud alert could be a smart proactive step. Setting up a fraud alert is free and you can place it directly with one of the three credit bureaus (they'll alert the other two). In a nutshell, a fraud alert lets lenders know to take extra steps to verify your identity when credit is applied for in your name, making it tougher for thieves to open fraudulent accounts.

Freeze your credit

This is a more dramatic step, and could be a good idea if someone has already tried to open a credit account in your name. A credit freeze essentially denies access to your credit report entirely, making it impossible to open accounts in your name. These can be set up for free with the credit bureaus, and you'll need to do it individually with all three of them.

The bottom line on credit cards and data breaches

There are two important takeaways here. First, every data breach is a unique situation, so there isn't a one-size-fits-all solution if one happens to you. Second, while data breaches are certainly an inconvenience, there are relatively easy steps you can take to protect yourself if one happens. By acting quickly and appropriately, there is usually no need to cancel your credit card after a data breach, but there are some other smart ways to make sure the data breach doesn't become anything more than a mild inconvenience.