Categories

Credit Card Basics

Are Virtual Credit Cards Safe?

When it comes to protecting your personal information, you can never be too safe. Last year, 13 million consumers were victimized by identity theft and billions of dollars were lost due to fraud. Whether or not you were among those victims, you may be looking for ways to bolster your online security. That's where virtual credit cards can help.

Fraudsters have found many creative ways to wreak havoc on our financial lives, and some of those methods may be thwarted by the use of virtual credit cards. A virtual card can help keep your information safe by hiding sensitive account details from prying eyes online. Think of it as an additional barrier between your credit card number and cyber identity thieves.

What Is a Virtual Credit Card?

Virtual credit cards provide disposable card numbers you can use to complete online transactions without putting the number printed on your physical card at risk. These cards are linked to your credit card account, so activity shows up on your statement just like any other purchase. All the while, your account number is never exposed. Virtual credit cards are available through select credit card issuers that offer them as well as by third-party services. In some cases, a virtual card becomes tied to the first merchant they're used to make a purchase with, or are only good for one transaction before they become unusable.

Not all companies offer virtual cards, so check in with your credit card issuers to see if it's an option. With select Citi cards, for example, you can enroll in a virtual credit card program and receive a randomly generated virtual account number that you can use while shopping online. Capital One's Eno program operates a little differently, providing unique virtual card numbers through your web browser that you can use at specific merchant sites.

Do Virtual Credit Cards Help Keep Your Information Safe?

Half of consumers currently do most of their shopping online, according to a recent Qubit survey. Using virtual credit cards can provide peace of mind. Even if a virtual card number is compromised, it may not do much good to a criminal because it might already have been deactivated.

They may still rack up unauthorized charges, but you won't have to go through the headache of closing out your account, replacing your card and updating your payment methods. You can simply report the unapproved transactions and move on. Because of the Fair Credit Billing Act, you'll never be responsible for more than $50 in fraudulent charges, and many credit card issuers bring that liability down to zero.

Virtual credit cards essentially give you a leg up over fraudsters, especially if you're using a single-use number. Not only will it mask your actual account number—it'll also be invalid after one transaction, rendering it useless to hackers. In some cases, consumers can even establish a virtual credit card number that has a predetermined spending limit and expiration date.

Benefits and Drawbacks of Virtual Credit Cards

Virtual credit cards provide a lot of advantages to consumers, but they aren't perfect. Weighing the pros and cons can help you determine if they're right for you.

Pros

  • Extra security: They shield your credit card number while shopping online, providing extra protection against identity thieves.
  • Easier to combat fraud: Canceling your account or card number isn't necessary if someone manages to obtain your virtual credit card number to make unauthorized charges. You also won't have to go through the trouble of updating your payment information with merchants that have your card on file.
  • Convenience: Virtual credit cards are flexible and may allow you to set a specific spending limit and expiration date. They can also be created at a moment's notice for immediate use.

Cons

  • Refunds may be tricky: Every retailer is different, and some may only issue refunds using the original payment method. This could present a problem if you used a virtual credit card number that's no longer active. You might instead get store credit, check or gift card.
  • Only works for card-not-present transactions in most cases: Virtual credit cards are designed for online and phone transactions only. Since you can't use them to make in-person purchases, they don't offer any additional fraud protection at brick-and-mortar retailers. You may also run into an issue if you use a virtual credit card to book something online that you'll later claim in person—like a hotel room or car rental that requires you to pay with the same card you used to make your reservation.

Alternative Ways to Protect Your Information When Shopping Online

Virtual credit cards are a great weapon against potential fraud, but there are some other easy steps consumers can take to prevent identity theft. Here are some additional safeguards to consider:

  • Take advantage of identity theft monitoring. Identity theft protection services, including what's offered by Experian, can provide comprehensive ID monitoring and alerts. If there's a change on your credit report with any of the three credit bureaus, you'll be the first to know. Experian's service also includes dark web surveillance that scans the deepest corners of the web to provide you with some extra peace of mind.
  • Opt into Visa Checkout. This free service allows you to securely store your Visa credit card information. When shopping with a participating online retailer, you can then pay with Visa Checkout. Your credit card information will automatically pop up so you don't have to enter it again. Instead of relying on the retailer to securely store your card information, you're covered with Visa's standard security protections.

The Bottom Line

With more and more consumers doing the bulk of their shopping online, virtual credit cards offer an extra level of protection because they make it more difficult for identity thieves to steal your private information. Adding in free credit monitoring is another way to stay one step ahead of fraud by knowing exactly what's in your credit profile. If something fishy pops up, you'll get a real-time alert and can quickly dispute it online.