Amid all the internet clamor over the lowest rate credit cards, zero interest transfers, and of course, rewards points, it’s often easy to forget the fact that good, old fashioned cash is your best defense against identity theft. That alone is a compelling reason to use it as much as possible.
Sure credit and debit cards offer various forms of fraud protection, but cash keeps identity theft from happening in the first place.
Theft Of Money Is Nothing Compared To Identity Theft
We can agonize over the potential for the loss of cash in a bank account as a result of a lost or stolen debit card, or of the potential for a thief to tap out the remaining balance on a credit line. But neither of those potential losses comes close to the outright theft of our identity. And each carries a limit of loss anyway.
If all we could lose in an identity theft situation was a limited amount of money, it wouldn’t be nearly so terrifying. But if access to a single account is stolen, a thief could take over and plunder every account we’re connected with, and a whole lot more.
With sufficient information, a thief could become “you“ – for financial purposes – and do some or all of the following:
- Empty your bank accounts and investment accounts
- Max out your credit cards and credit lines
- Get employment in your name
- Obtain new credit in your name
- Apply for government benefits in your name
- File a fraudulent income tax return and obtain a huge refund in your name
- Commit other illegal acts in your name
- Sell your identity to a third party for immediate cash
Sure, eventually you will remedy that situation, but it may take months or years, and that is disruptive. And if the theft is severe enough, you may even need to get a new Social Security number, and transfer all of your financial information from what ever the source. In a financial sense, that’s like having to create a whole new you!
Credit And Debit Card Paper Trails
A generation or so ago, no one worried about identity theft. There are various reasons for this, but one of the most significant is the widespread use of credit and debit cards. Every time you use plastic in a transaction, a paper trail is created! That paper trail is a rich target for identity thieves.
As a result of a single transaction, a thief will know your bank, your account number, your signature and other important information, which may be all that’s needed to gain access to your account, and ultimately to your entire identity.
Back when most transactions were conducted in cash, this threat was non-existent. After all, cash leaves no paper trail. There’s a lesson in there somewhere.
A large percentage of identity theft is “an inside job” – it isn’t initiated by some shady looking dude with a wide brim hat hanging out in a dark corner of the store, but by an employee of the establishment. In fact, it is estimated that as much as 65 to 75% of identity theft is committed by employees.
And why not – employees are the ones with access to the paper trails! When we do business with any company, we’re supplying them with personal information that could be used to perpetrate identity theft. We’re relying heavily on the integrity of the employees of that company and on the hope that they won’t use that information to steal our identity or commit some other form of fraud.
But not all employees have integrity. Access to personal financial information – in combination with an employee’s need (or greed) for cash or other benefits – could cause them to cross the line to the dark side.
Transactions completed with plastic increase the possibility of this outcome. But if you pay with cash, there is no personal information supplied on your part. Identity theft thwarted!
Using Cash To Minimize Identity Theft
By paying in cash – especially for small purchases – you lower the chance of being a victim of identity theft. The last thing that you want to have happen is to become a victim of identity theft as a result of a purchase of a bottle of soda at a dollar store! Paying cash for small purchases is a way to minimize that outcome.
Plan to carry a certain amount of cash with you at all times, and establish guidelines for payment methods based on the amount and type of the purchase.
For example, you could decide that you will pay cash for any purchases under $50 – that would probably eliminate most credit/debit card transactions. Any transactions of a higher amount could be paid by either credit or debit card.
If that strategy cuts your use of plastic by 75%, it will also lower your chance of being a victim of identity theft by 75%!
Paying cash is a way of disarming would-be identity thieves. Cash is virtually “invisible” – it leaves no record of it’s users. That’s your single best protection against identity theft.
How common is cash as a payment method in your life?
photo credit: freedigitalphotos.net