Virtual credit card: What it is, how it works, and why you should use it
One of the most effective tools for enhancing security in your digital transactions is the virtual credit card.
With online transactions becoming more common, ensuring the security of your financial information is more important than ever.
Cybercriminals are constantly developing new ways to steal sensitive data, making it essential to adopt extra security measures when shopping online.
Unlike traditional credit card, virtual credit cards are designed to protect users from fraud and unauthorized charges by generating a temporary and unique card number for each transaction or merchant.
But what exactly is a virtual credit card? How does it work, and is it really worth using? We explore everything you need to know about virtual credit cards, including their benefits, potential drawbacks, and how to choose the right provider.
What is a virtual credit card?
A virtual credit card is a digitally generated card number that is linked to an existing credit card account.
Instead of using your real credit card number for online purchases, the virtual card provides a randomly generated 16-digit number, an expiration date, and a security code.
This number is meant for temporary use and can often be set to expire after a single transaction or a specific period, reducing the risk of fraud.
Virtual credit cards work similarly to physical credit cards but offer enhanced security.
Since they are not tangible, they cannot be lost or stolen in the traditional sense. Instead, they act as a protective layer between your real credit card and the merchants you transact with online.
How does a virtual credit card work?
When you request a virtual credit card from your bank or credit card issuer, the system generates a temporary card number linked to your real credit card account.
This number can be used like a regular credit card for online transactions, providing an extra level of security by keeping your actual card details hidden.
Each virtual credit card number is unique, and some banks allow users to customize card settings.
For example, you can set spending limits, restrict usage to specific merchants, or choose an expiration date.
Some virtual cards expire after a single transaction, while others can be used multiple times until the set expiration date.
By using a virtual credit card, consumers gain additional protection against fraud, as the real credit card number is never shared with the merchant.
If a virtual card number is compromised, it can be easily deactivated without affecting the primary credit card account.
Why should I use a virtual credit card?
Virtual credit cards offer several benefits that make them an excellent choice for online shoppers.
They enhance security, provide better spending control, and offer convenience in managing digital transactions.
Enhanced Security for Online Transactions
One of the main reasons to use a virtual credit card is the extra security it provides.
Since each virtual card number is unique, hackers and fraudsters cannot use it beyond the intended purpose.
Even if a virtual card number is compromised in a data breach, it can simply be deactivated, preventing unauthorized transactions.
By keeping your real credit card number hidden, virtual credit cards reduce the risk of identity theft and fraudulent charges.
This is particularly beneficial when shopping on unfamiliar websites or platforms that may not have strong security measures in place.
Protection Against Unauthorized Charges and Fraud
Virtual credit cards allow users to set spending limits, merchant restrictions, and expiration dates, helping to prevent unauthorized charges.
If a scammer attempts to use a stolen virtual card number, they won’t be able to exceed the pre-set limit or use it after its expiration date.
Additionally, if a merchant tries to charge you for an unauthorized subscription or hidden fees, the virtual card settings can prevent it from happening.
This makes virtual credit cards a great tool for managing recurring payments and avoiding unexpected charges.
Convenience and Flexibility for Online Shopping
Virtual credit cards offer convenience by allowing users to generate a new card number instantly.
Unlike traditional credit cards, which require physical issuance and delivery, virtual cards can be created and used immediately via a bank’s website or mobile app.
For frequent online shoppers, this feature is particularly useful as it eliminates the need to enter and store real credit card details across multiple websites.
Instead, each purchase can be made with a new virtual card number, further increasing security.
Better Control Over Subscriptions and Recurring Payments
Many online services and streaming platforms make canceling subscriptions difficult, often continuing to charge users even after they attempt to cancel.
Virtual credit cards help solve this problem by allowing users to set expiration dates on their payment methods.
If a subscription is linked to a virtual card that expires after a set period, the merchant won’t be able to continue charging once the card is no longer valid.
This is a practical way to avoid unwanted charges and prevent forgotten subscriptions from accumulating costs.
Are virtual credit cards safe?
Yes, virtual credit cards are one of the safest ways to shop online. Their ability to generate unique numbers for each transaction significantly reduces the risk of fraud and unauthorized charges.
Because virtual credit card numbers are generated randomly and often expire after a single use or a set time, they are nearly impossible for hackers to reuse.
Some providers even allow users to restrict virtual cards to specific merchants, ensuring that the number cannot be used elsewhere.
However, while virtual credit cards offer excellent security benefits, they are not without limitations.
Some merchants, such as hotels and car rental agencies, require a physical credit card for verification purposes.
Additionally, refunds for purchases made with a virtual credit card can be complicated if the virtual card number has already expired.
Despite these minor drawbacks, virtual credit cards remain a highly effective tool for protecting personal financial information and preventing fraudulent transactions.
HOW DOES A VIRTUAL CREDIT CARD WORK? | VIRTUAL CREDIT CARD EXPLAINED
How to get a virtual credit card
Getting a virtual credit card is a simple process, provided that your credit card issuer offers this feature.
Many major banks and financial institutions now provide virtual credit cards as part of their online banking services.
Steps to obtain a virtual credit card
- Check if your credit card issuer offers virtual credit cards. Some of the major providers include Capital One, Citi, and American Express.
- Log into your online banking account or mobile app.
- Navigate to the virtual credit card section and generate a new card number.
- Customize the virtual card settings, such as spending limits, expiration date, or merchant restrictions.
- Use the virtual card details for online purchases, just like a regular credit card.
Since not all banks offer virtual credit cards, it’s important to verify with your provider before assuming the feature is available.
Tips for choosing the right virtual credit card provider
Selecting the right virtual credit card provider is essential to ensure security, convenience, and compatibility with your financial needs. Several factors should be considered when choosing a provider.
Checking Card Network for Merchant Acceptance
Virtual credit cards should be issued by a major network such as Visa, Mastercard, or American Express to ensure they are widely accepted by merchants.
Ensuring Compatibility with Digital Wallets and Software
If you frequently use digital wallets like Apple Pay or Google Pay, it’s important to verify that the virtual credit card can be integrated into these platforms.
By carefully evaluating these factors, you can choose a virtual credit card provider that best meets your needs and offers the highest level of security for your online purchases.
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