As the number of publicly reported data breaches continue to mount the need to protect your personal information has become even more important. A virtual credit card is a new trend aimed at protecting credit card users from credit card fraud.
So, what exactly is a Virtual credit card?
A virtual credit card is a temporary credit card number that can be used in place of an actual credit card number for transactions to avoid exposing the original credit card number to potential fraudsters. A virtual credit card essentially allows you to use your credit card without exposing your credit card details. To do this, a unique credit card number that is linked to the main credit card is issued to the user to be used for transactions instead of the original credit card number.
Virtual credit card issuers may allow you to limit a virtual credit card number for single-merchant use, specify a spending limit or set an expiration date. Some may even allow you to freeze, lock or delete a virtual credit card number as well. All of these features further strengthen a virtual credit card’s security. In a world where data breaches are almost inevitable, having this option to protect yourself is worth considering.
What are the Benefits to a Virtual credit card?
Some potential benefits to using a virtual credit card include:
- Flexibility to close the account: Unlike your main credit card account, with a virtual credit card, you can easily close an account if it has been compromised. With an ordinary credit card, if you’re affected by a data breach or credit card theft, you’d have to contact your card issuer to get a new card and a new number, which creates a hassle for you to get all of your financial payments adjusted to the new number. With a virtual credit card, if you’re notified of a data breach or theft of your virtual card details, you are able to close the virtual credit card account and keep your main credit card.
- Another large benefit to using a virtual credit card is that it makes it easier to limit and track your spending with specific shops and vendors. With a virtual credit card, depending on your card issuer, you may be able to specify a spending limit for specific shops. Once you hit that limit, you won’t be able to make any additional purchases with that card. If you’re someone who may need help with budgeting, this may be an attractive option for you.
What are the drawbacks to using a Virtual credit card?
As with any situation, there are always drawbacks to consider. Below are some of the potential downsides to consider when considering a virtual credit card.
With a virtual credit card, you may experience difficulty returning purchases, regardless of if your purchase was made online or in store. Many stores require you to insert or swipe the card you used to purchase to get a refund. Because you don’t have a physical card with a virtual credit card, you may have to settle with an in-store or merchandise credit instead of a monetary return. As virtual credit cards become more popular, though, this issue may be resolved soon.
Another potential drawback of using a virtual credit card is that it has short expiration dates. While this can protect you from theft, it prevents you from using the number to sign up for subscriptions or recurring payments. While you could most certainly still use your virtual card for such purchases, you will have to be diligent with keeping on top of updating payment methods once your card expires.
Who Provides Virtual Credit Cards?
If you are wondering how you can get a virtual credit card, well… as of this writing it depends where you live. If you are in the US, there are three major banks that currently provide virtual credit cards.
Bank of America provides a tool called ShopSafe that enables you to develop a virtual credit card number to use at single merchants. This tool also allows you to set a spending amount maximum and the length of active months for the card. Another perk of this tool is that you can close account numbers from it.
Capital One provides an online assistant tool called Eno that can be installed on various internet browsers. You can use Eno after it’s been installed to generate a virtual credit card when you’re ready to pay at an online retailer. The web extension app can direct you to an account page where you can manage, delete or freeze virtual credit card numbers.
Citi offers a web-based tool for PCs that generates virtual credit card numbers that you can use for online transactions. You can use this tool to review purchases, set maximum spending limits and set number expiration dates.
Apple Credit Card
In addition to these three current virtual credit card offerings, a new offering will be coming out soon from Apple. The tech giant recently announced it would be rolling out its in-house physical and virtual credit card, Apple Card in 2019. As it’s a new offering that hasn’t yet been rolled out, there aren’t a ton of details on it, but it is said to function like both a virtual and physical credit. It will be accepted at any place MasterCard is, and the app will categorise your purchases for you.
With Apple Card, you’ll get the benefits of a cash-back credit card and the security of a virtual credit card without having to take extra steps. If you’re interested in this option, stay tuned into the latest tech news for an exact release date and more details from Apple.
If you’re looking to enhance the protection of your credit cards, a virtual credit card may be able to give you some peace of mind. The ease of which you can delete or lock a virtual credit card account without compromising your main credit card is a huge bonus. However, potential downsides of virtual credit cards include limiting its use to online or phone orders, and difficulty getting refunds.
In the future, it’s entirely possible that virtual credit card numbers will be commonplace.
Considering getting a credit card?
The best credit card for you would depend on your personal circumstance and how you intend to use your credit card. We have put together a list of some of the best credit cards in New Zealand to help you find the best credit card in NZ to suit your individual needs. Alternatively, you can narrow down your search by credit card type such as interest free credit card, low rate credit card, balance transfer, credit card reward or air nz credit card