With identity theft, phishing attacks, and many other fraudulent activities on the rise, many consumers are looking for answers on how to protect themselves effectively – without breaking the bank.

Signing up for a credit monitoring service is certainly an easy, convenient method and you can take to minimize the risk of identity theft. But at a cost of anywhere from $120 to over $350 annually, are they worth the investment?

The answer may well be “no”, especially for families with a tight budget. The bottom line is, much of what these for-profit monitoring services are providing for consumers, they can do on their own for free. But many individuals either are not comfortable, or feel they do not have the time or expertise, to implement their own strategy. If this describes your situation, then the peace of mind provided by hiring a commercial identity theft protection firm makes sense. For a convenient table comparing some of these services and what they provide, read this article.

So for those of us who choose to tackle this important issue on our own, what are some of the free or low-cost tools available to consumers concerned about identity theft?

Credit Report Monitoring. By now most individuals are probably aware that they are entitled to a (minimum) of one free annual credit report from each of the big three credit reporting agencies (some state laws may entitle residents to additional reports). Through regular monitoring of your credit report, you can spot inaccuracies that may be signs of identity theft. Request your free credit report through www.annualcreditreport.com at regular intervals throughout the year (since there are 3 reporting agencies, you can order from a single agency every 4 months).

Opt-out of Credit Card Offers. Pre-screened offers for credit cards and loans that fill your mailbox can be used by identity thieves. The procedure for opting out is easy – read about it here.

Credit Freeze. This action will restrict access to your credit reports without specific authorization from you with a personal identification number. This will protect you from identity thieves that may try to open new accounts in your name (because creditors won’t be able to access your file without your authorization), but will not prevent misuse of existing accounts. To implement this, simply contact each of the credit reporting agencies.

Fraud Alert. These are used primarily if you suspect you have or might be a victim of identity theft, and are “flags” on your credit report(s) warning potential creditors that they need to use “reasonable policies and procedures” to verify your identity before issuing credit.These can be implemented in 90-day increments (“initial” fraud alert) or an extended fraud alert, lasting 7 years. To place a fraud alert on your credit reports, again simply contact each of the credit reporting agencies.

ChoicePoint Report Monitoring. Similar to your credit report, you are also entitled to a free copy of your file each year. Data that may be included in these report(s) involves insurance and claims history, criminal records, information about credit, bankruptcy, professional licenses, rental and real estate ownership records– essentially information that may be relevant to a potential employer, landlord, or insurance company in establishing your risk level. You can access your report(s) at the www.choicepoint.com website (note that there are 3 different agencies that you may want to request free reports from).

Regardless of whether or not you utilize a credit monitoring service, there are standard precautions that consumers should all take to minimize their risk, which are spelled out in detail in this article. If you do decide that a credit monitoring service makes financial sense for you, make sure you understand exactly what services you will be provided for your money– many firms simply monitor credit reports or put fraud alerts on your credit files– things consumers can do on their own free of charge. For a great list of questions to ask when “interviewing” a credit monitoring firm, here is a link to the consumerfed.org website.

Readers, how do you feel about the value provided by credit monitoring services?

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