5 Ways to Protect Your Personal Finances Against Identity Theft

Unfortunately, identity theft is a genuine concern that consumers need to consider. The Ascent's identity theft and credit card fraud study found about 1.1 million reports of identity theft collected by the Federal Trade Commission (FTC) in 2022. If you want to keep your money and personal and financial data safe, you must take extra care to protect yourself. Here are a few ways to protect your personal finances against identity theft.

1. Review your financial statements

Don't disregard your financial statements. You can stay informed by taking a few moments to scan your credit card and bank account statements. By doing this regularly, you can spot unusual transactions and report them to your financial institution immediately. If you find signs of fraud, your bank or credit card company can help you take steps to protect your account.

If your credit card account has been impacted, your bank will deactivate your current card and send you a new one to protect you from further fraudulent activity. Many credit cards offer $0 fraud liability protection, meaning you won't be liable for fraudulent charges that you report. But it's important to report fraud promptly, so don't delay contacting your financial institution.

2. Use strong passwords and two-factor authentication

If you're using easy-to-guess passwords or the same password for each account, you're putting yourself at greater risk of having your accounts hacked. Using strong passwords for all online accounts, especially financial ones, is wise. Many companies offer two-factor authentication, which provides an added layer of protection. If available, make sure you use this security tool so it's more difficult for fraudsters to access your financial accounts.

3. Don't access financial accounts when using public wifi

Checking your bank account balance at a grocery store, mall, or airport can be tempting, but you want to avoid accessing financial accounts and data when connected to public wifi. Fraudsters can access your financial information, putting you at risk. It's best to only log in to financial websites and apps when using a secure, private internet connection.

4. Don't ignore your credit report

It's also a good idea to review your credit report regularly. Doing this helps you stay informed about your finances and gives you greater insight into what information creditors see. It also allows you to quickly spot reporting errors or signs of fraud.

If you see a new credit card account you didn't open, someone else likely used your personal information to apply for a credit card. If you have fraud concerns, report your findings to each of the three credit bureaus immediately.

Thanks to federal regulations, consumers can access their credit report from each of the three credit bureaus once every 12 months. Consumers were able to check their credit reports for free weekly through AnnualCreditReport.com throughout the COVID-19 pandemic.

But now, consumers have access to free weekly credit reports indefinitely. While reviewing your report weekly is unnecessary, it's a good idea to check your credit report at least once a year (or more frequently if you suspect your information has been compromised). By doing this, you can act quickly if you've been a victim of fraud or identity theft.

5. Avoid giving personal information to others

Be mindful of the personal information that you share with others. When using social media, consider what information you share that could be used against you. Even providing access to your full birth date or the names of family members could put you at risk of fraud. This information could be used to steal your identity and access important financial accounts.

You should also be cautious about who you share personal details with when you speak to customer service representatives. If asked to provide personal information for verification purposes, only do so if you contact the financial institution directly. If you receive an email or text message asking for personal or financial information, be alert -- because it's likely a scammer.

Protect your financial accounts

Fraudsters are getting more creative and finding new ways to exploit others. Make sure you're doing what you can to protect your personal data and financial accounts. You don't want to give someone else access to your money. For more tips, check out our personal finance resources.