Hard drives and USB flash drives are treasure troves of personal data. They're also among the most common sources of data leaks. If you lose a flash drive, external hard drive, or laptop containing sensitive personal information, you will be at risk. Fortunately, encrypting your hard drive can give your data an extra layer of protection beyond setting up a system password. Encryption will conceal your drive's data and make accessing the files almost impossible for anyone who does not know your encryption password.
The Ultimate and Business editions of Windows 7 and Vista come with BitLocker, a tool that lets you encrypt your entire hard drive. If you don't have the Ultimate or Business version, another alternative is to use TrueCrypt, a free, open-source tool that can encrypt your entire disk, a portion of a disk, or an external drive. For its part, Mac OS X includes FileVault, a tool for encrypting your Mac's home folder; Lion, the next major Mac OS X release on the horizon, will be able to encrypt a whole hard drive.
Another option is to buy external hard drives and flash drives equipped with encryption tools. Some of these drives have built-in fingerprint readers for additional security. For more about secure flash-drive options, see "Secure Flash Drives Lock Down Your Data."