A major Missouri-based supermarket chain, Schnucks, recently reported 2.4 million debit and credit card numbers among its customers may have been compromised. In such a situation, having your financial institution issue a new credit card should be enough to stop unauthorized charges.
However, when personal information is compromised, there can be additional consequences. LinkedIn, PayPal and LivingSocial are among the major companies that have suffered data breaches in recent years - potentially putting sensitive consumer information in the hands of fraudsters. Confiscated email addresses, passwords and birth dates can open the door to identity theft.
Here are ways you can stop data breaches from wreaking havoc on your financial life:
Review your passwords. According to research last year by security firm CSID, 61 percent of consumers use the same password for multiple websites. That's not surprising, given the large number of online accounts many people have. By using the same login credentials, users don't have to go through the trouble of remembering different passwords and can avoid repeated "Forget your password?" procedures.
Unfortunately, using the same password can make it easier for cybercriminals to take over all of your online accounts at once - potentially enabling them to use the stolen password and your email address to access your online bank accounts. Consequently, it's vital to use different passwords for each website, especially ones which store your financial accounts. Password-management programs, such as KeePass and LastPass, can help you keep track of your passwords.
Pull your free credit report. Whether or not you become a victim of a data breach, it's a good habit to check your credit report for errors. Not only can errors be indicative of identity theft, but they can also lower your credit score. You're entitled to one free credit report each year at AnnualCreditReport.com. Since credit reports can vary among the three major credit bureaus - Equifax, Experian and TransUnion - it's important to notify all three if you spot any errors.
Sign up for free credit monitoring services. A number of websites offer credit monitoring services, which trigger an alert when something changes on your credit report. Normally, credit bureaus and credit card issuers charge a monthly fee for such services.
Fortunately, there are no-cost alternatives. Credit Karma, Credit Sesame, Quizzle and AllClear ID offer free online tools to help consumers keep track of their credit card activity.
Exercise a credit freeze. If you think your personal information has been compromised, order a credit freeze, which will prevent any potential new creditors from accessing your credit report, and stop an identity thief from opening accounts under your name.
However, keep in mind you won't be able to open new credit accounts while the freeze is in place. Also note that credit bureaus charge a small fee each time you order or lift a credit freeze.
Moreover, it's best to safeguard your credit profile before suffering a data breach. While there is no guarantee you'll protect yourself from cybercriminals, you can minimize the potential damage done by hackers and identity thieves if you take steps ahead of time to secure your information.
Simon Zhen is a columnist and staff writer for MyBankTracker.com, where he covers banking, financial technology and savings rates.
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