Very similar to a credit freeze, an account freeze will put a stop to the use of your existing accounts. While a credit freeze prevents the credit reporting agencies to share your credit reports with third parties for the purposes of credit granting decisions and establishments of new accounts, an account freeze temporarily freezes any usage of your existing accounts.
Placing a freeze on your existing accounts is a very good idea for two various situations: 1) when you travel for an extended period of time and, 2) when you plan not to use an account like a credit card account for a while. In most cases, you can call the company and place a freeze on your account and even save money. For example, if you place a freeze on your phone account to stop any usage of the phone while you’re out of the country, you will probably not incur the usual monthly fees, depending on the quality of your phone company’s customer service.
Placing an account freeze is not a common practice, especially when it comes to identity theft prevention. But in one particular real life story, a company had placed an automatic freeze on a customer credit card account because the customer had placed a travel notice on his account by accident.The customer found out about this because his credit card stopped working. Although the company action was unintentional, it demonstrates how an account freeze can be effective to prevent identity theft on your existing accounts. For example, the identity protection KAOS™ framework recommends limiting the number of your credit cards and even suggests having only two credit cards, one for daily use and another for emergency. In this case, you could freeze the emergency credit card account for as long as you don’t plan to use it and lift the freeze in case of emergency. In all cases, it’s a quick process to place and lift an account freeze.
Some of the accounts that you should consider freezing for a period of time include accounts which you do not use frequently such as your emergency credit card and your home equity line of credit. Particularly, the risks of a home equity line of credit account takeover in an identity theft case are very high. First, because these accounts have typically a very high line of credit, second, they’re tied to your home and creditors can just get their money back by selling your house for which you have worked so hard to pay off, and third, you are fully responsible for the amounts withdrawn and the banks will not hesitate to sell your house to get their money back.
So, read and understand the identity protection KAOS framework, reduce and limit the number of credit accounts, and place a freeze on the accounts you do not frequently use.
Read about other prevention tools besides an account freeze.