Let’s face it, at some point over the past few years, we’ve all felt our heart skip a beat over new federal regulations associated with the financial sector. Whether it was the new credit card act that went into effect more than a year ago or a sudden jump in unemployment, we can all attest to the occasional concern.
Unfortunately, there were many who were banking on those skipped heart beats and moments of concern. And when we say “banking”, we mean it literally.
The Big 3
Despite efforts made by the Big 3 credit bureaus (Experian, Equifax and TransUnion), many Americans don’t realize that the monthly subscription they’re paying upwards of $30 or more per month, that same information can be requested from those agencies.
There’s no need to go through the middle man so to speak. Not only that, but consumers can request that information once at year at no cost. While there are various programs, sometimes referred to as credit monitoring services, the truth is, those services often have no bearing on a credit card company or bank’s decision making process.
And there’s more. The formulas used to devise your credit scores are proprietary. No one knows what they are, so those companies that claim they do, quite frankly, are lying. While most have incorporated their own mathematical formulas, the truth is, there’s no way they can possibly know how close – if at all – theirs is to the ones used at any of the credit bureaus. Your FICO score – your true score – is the one defined by Fair Isaac and most importantly, it’s the one your credit card company uses to determine your interest rate, whether to raise your credit limit and whether to offer its credit card to you at all.
The Offers
There are other services that have become increasingly popular as a result of the recent recession. One of those offerings is in the form of debt protection services. These insurance policies are designed to pick up the bank or credit card payments if anything happens to you or your job. The Government Accounting Office released a report in April. It found these “insurance” policies resulted in about twenty one cents for every dollar spent. And the fees? They can easily equate to 10% or more of your average monthly balance.
So what does all this mean to the average American who carries a credit card? Actually, it’s quite simple. Try to pay your credit card balance in full each month, don’t be late on your payments and instead of paying someone else to cover your bases so to speak, take the money you would have paid one of these companies and instead put it towards your credit card balance or for that matter, put it into savings. This way, you’re building your own “insurance” policy to help you cover the bases. And you’re earning interest on that money, too. It’s a win-win for the consumer.
As for those companies that will monitor your financial goings-on to ensure your identity hasn’t been stolen or your financial information hasn’t been compromised, your credit card company is your best partner in these efforts. After all, with most credit card offers that include zero liability to its card holders, it’s to their advantage to stay on top of it as much as it’s to yours. There are simply better ways to spend that $20, $30 or $40 a month for a service that you already have.
The Little Known Secret
Some people are surprised that despite the fears of identity theft being a wide spread problem, it actually accounts for only about 3.5% of consumers problems. Finally, the Wall Street Journal reports that there exists many credit score and identity protection companies that will advertise a thirty day free trial, but then will charge the user’s credit card after several days. When the cardholder contacts the companies, they learn that they can only reach them during the work week, a time when the vast majority of users are at their own jobs.
Bottom Line
While we’re all trying to remain proactive in our efforts, there are those scenarios that can accomplish anything but the security we’re looking for. Your best effort is to choose your new credit cards wisely and give weight to what the card company offers you. Twenty four hour customer support is always a good thing, especially if you’re traveling around the world. Double check to be sure a zero fraud liability is a part of your credit card and always read the fine print.
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