Avoiding ID theft is more about common sense that anything else and the following tips will help to protect yourself against the threat.

Follow these simple steps -

1. Keep all your official documents and financial related material in a safe place, away from prying eyes. This includes passport, driving licence, credit cards, pay slips, chequebook, building society passbooks etc
   
   
2. Regularly check ALL financial statements such as bank and credit cards. If possible only deal with financial institutions that offer online banking/credit cards etc, which means you can check weekly rather than wait for your monthly statements. Online banking is now very secure. See also - 3 easy steps to safer online banking
   
   
3. Buy a shredder, small ones cost under £30. Then shred all official documents and financial statements that you don't need to keep
   
   
4. Be vigilant for anything odd in your financial matters. For example, you might not have received a credit card bill for 6 weeks
   
   
5. Order a copy of your credit file at least once a year. This will show all the current finance arrangements in your name, check them carefully. More information on the Credit File section
   
   
6. Don't give important personal information out over the phone unless you made the call or are 100% sure who you're talking to. For example, somebody from your 'bank' might call you asking to check your full name, DOB and Mother's maiden name but these types of calls are from fraudsters
   
   
7. Don't reply to any email from your bank or Credit Card company possibly suggesting there has been some fraud. These emails are scams which are trying to trick you into entering all your login information
   
   
8. If you move house subscribe to the Royal Mail redirection service for at least one year
   
   
9. Check your bills as soon as they arrive in the post. If there's anything suspicious contact your bank or Credit Card company immediately
   
   

As its name suggests it's a form of insurance designed to pay for your expenses (potential money stolen and clearing up the forged paperwork) should fraudsters steal your ID.

The cost is usually £50 - £100 per year.

However, the marketing material for this type of insurance does not admit that by law any money stolen as a result of identity theft will be refunded by your bank. Perhaps the best way to work out if ID theft insurance is worthwhile is to use a simple Personal Finance rule -

The harder a financial product is pushed, the worse value it will be for you and the greater the profits for the banks or institution selling it

And ID theft is heavily promoted, especially when taking out a Credit Card.

Some people though are worried about ID theft and therefore think that ID theft insurance is worth paying. If so check out what Privacy Guard, offers -

• Over 500,000 registered UK users
• Credit Monitoring - whenever someone has searched or viewed your credit profile, or whether anything changes in it, we'll alert you to it
  
• Credit Reporting - receive up-to-date Credit Reports, and view your Credit Score so you're always informed
  
• Victim-of-Fraud Resolution - we assign a dedicated specialist to advise you and act on your behalf
• Other Protection Features - helping you to maintain control over your identity
• £6.99 a month (no contract, cancel whenever you want)

• More information on Privacy Guard + a FREE Credit Report + 1 FREE month

According to a spokesman from the CIFAS, the UK's fraud Prevention Service -

'ID theft is still a relatively rare crime, but it is on the increase'.

So as long as you're diligent with your personal information, keeping it safe, shredding documents, being careful when online etc, the risk of ID theft is probably overstated.

And this means that ID theft insurance is both a frivolous and expensive insurance plan to take out.

For most people ID theft is both expensive and a complete waste of money.

Don't get too concerned with the threat, realise that it's hyped by both the media (hyping a story results in more readers/viewers) and by those with an interest of selling us protection.

Keep your financial documents safe, don't reply to any email that's even mildly suspicious and shred unwanted statements/bills - then you have little to worry about.

Fraudsters remember love to target the weak, and in this case 'weak' means people who don't recognise the risk, and take the simple steps to avoid it.

See also

• Why we like and use these 3 Credit Cards