July 14, 2011 -- More than eight million Americans were the victims of identity theft last year. What the personal information thieves are looking for can often be found right in your wallet--which is why it's so important to know what's in there. Mellody Hobson, president of Ariel Investments, talks about what you should and should not have in your wallet.
1. Your wallet can contain your life, which is not always a good thing. Let's start with what we should keep in our wallets. Credit cards?
Yes, you should carry a credit card. But just one credit card. The good news is that most people now have two credit cards, which is down from three cards just a year ago. I like this trend. The more cards you carry, the more likely you are to over-extend yourself. Also remember even if you have a credit card in your wallet but never use it, it adds to your available credit, which affects your credit rating.
2. So you should carry some cash?
I do think it is important to carry some cash. Studies show that when people use plastic versus cash they spend 12-18 percent more. Also, you don't want to use your credit card or debit card to buy things like gum and other small purchases. If you're just paying your minimum balance, you could end up paying interest on those small purchases.
3. We all remember George Constanza's wallet stuffed with receipts. Should we save all our receipts, and is our wallet the right place to keep them?
Receipts not only clutter your wallet, but they could contain information about you that identity thieves could use. So you should take any receipts out of your wallet every night. Either reconcile them at the end of the week online against your bank account or credit card website, or save them until the end of the month and reconcile them against your monthly statements. But don't store them in your wallet.
4. What else should you not have in your wallet?
The number one thing you should not carry in your wallet is your social security card. If it gets into the wrong hands, it can be used for everything from buying a car to opening a credit card. You should also never carry your passport in your wallet. Even if you are traveling in a foreign country, leave your passport in your hotel and just carry a photocopy of the picture page. And of course do not keep a list of your pins and passwords in your wallet. That would be a gold mine to a thief. Keep those passwords at home.
5. What else should we take out of our wallets?
Don't keep anything in your wallet that has expired. This includes old credit cards or membership cards. Just because they've expired doesn't mean thieves will not try to use them. Also remember most of them have at least your name on it, and probably your address and other personal information. The more information you can keep out of the hands of others, the better.
Many people carry old hotel key cards in their wallet. Although almost all U.S. hotels do not put personally identifiable information on their key cards, the cards can often be used to make purchases at the hotel spa or gift shop. My best advice is destroy them after you have checked out, you don't need to return them to the hotel.
Mellody Hobson's Extra Tips:
• Get a smaller wallet. This will force you to only carry around the essential items.
• If your wallet is stolen make sure you file a police report immediately, and contact all three credit reporting agencies, your credit card companies, and your bank.
• When you are traveling, make sure you keep your wallet in your front pocket, that way it will be a lot harder for someone to pickpocket you.