Online shoppers fall victim to credit card fraud every single day. If you’re not prepared, it could be your turn soon.
Fraud linked to online shopping cost Americans a total of $246 million last year.
While you’re probably taking some basic precautions, one of the most powerful ways to protect yourself is to use a virtual credit card while shopping online.
A virtual credit card allows you to generate disposable credit card numbers that prevent fraudsters from stealing your real credit card information.
In this guide, we’ll show you exactly how they work and where you can get one for free.
What is a virtual credit card number?
With a virtual credit card, you can randomly generate valid credit card numbers to use for specific online purchases.
These temporary numbers are linked to your real debit or credit card but act as a buffer between the bad guys and your sensitive personal data.
If these numbers fall into the wrong hands, fraudsters won’t be able to rack up huge charges, drain your bank account and ruin your credit score.
Say you accidentally shop at a fake store, or a big retailer suffers a data breach, or a virus is watching what you type. The fraudster will only be able to see your disposable number, which you can set to expire after one purchase or on a certain date.
This year alone, there have already been data breaches at U.S. Cellular, Kroger, T-Mobile, Microsoft Exchange, Hobby Lobby, GEICO, Carter’s, Guess and many other large companies.
If you use virtual credit card numbers, you can rest assured that if your information is exposed in a breach, your “burner” numbers will have long since expired.
How virtual credit cards help keep you safer
In the past, scammers would use various tricks to “skim” the information held in the magstripe technology of physical credit cards to create swipeable counterfeit cards.
Today, chip-enabled credit cards — which generate a unique, one-time code with every purchase — have made it much more difficult to commit this type of point-of-sale (POS) fraud.
However, chip technology does not protect you from online shopping and “card not present” fraud. If someone steals your card information, he or she can make purchases online without needing a physical card.
That’s where virtual credit cards can save the day. A virtual credit card is to online shopping as chip technology is to in-person, point-of-sale (POS) shopping.
Even if you don’t use a one-time burner, and your temporary number is stolen before it expires, fraudsters won’t be able to steal your personal information, like your name and billing address. And thanks to the Truth in Lending Act, your liability for any unauthorized purchases is limited to $50 so long as you report the fraud quickly.
Other uses for virtual credit cards
Protecting your credit card information isn’t the only benefit of using virtual cards.
They can also be used to manage family finances.
For example, you can set up a virtual card number for your kids, complete with expiration dates and spending limits.
If they bad-mouth you and need their spending privileges revoked, just log in to your account and lower their spending limits. No need to confiscate any cards.
Similar to managing family spending, virtual credit cards also have plenty of business spending applications.
Are there any downsides to virtual credit cards?
While virtual credit cards are one of the best ways to protect yourself from online shopping fraud, they do have some disadvantages.
Slower checkouts. If you’re accustomed to one-click shopping and saving your credit card info for speedy purchases, virtual cards can take some getting used to. Each time you make a purchase, you’ll have to generate your virtual numbers and enter them in.
Return complications. When you make an online purchase and want to return it in-store, some vendors need to see the card used to make the purchase. If you used a virtual number, the numbers on your card won’t match the numbers on your receipt. Keep all the records of your digital purchases when using a masked credit card.
Recurring-purchase problems. Since virtual credit cards are typically designed to expire after short periods, they won’t work for recurring subscriptions such as Netflix. However, some services let you generate virtual card numbers that you can link to a specific vendor and set to never expire.
Reservation issues. When you rent cars online, book hotels or reserve seats at the movie theater, merchants may need to match your credit card number to your reservation. Sometimes this can be solved by showing your driver’s license or calling your credit card company to verify the purchase, but it’s an extra hassle. Again, keep records.
False sense of security. Just because you use virtual credit cards doesn’t mean you’re immune to fraud. You still need to be vigilant. That means regularly reviewing your account statements for suspicious activity and checking your credit score.
Which credit card issuers offer virtual card numbers?
Most of the top credit card issuers offer some sort of virtual credit card. That said, some issuers have special names for their services and don’t call it a “virtual credit card.”
In most cases, you won’t need to open any special new accounts. All you have to do is opt in to the virtual card services with the accounts you already have.
Chase: Chase offers a form of virtual credit card within its Chase Pay app. Instead of creating single-use numbers, it generates separate numbers for various merchants that can be used multiple times.
Capital One: Capital One’s virtual cards are generated through its Eno browser extension.
American Express: American Express virtual cards are available only with corporate cards through the American Express Go portal.
Wells Fargo: Wells Fargo cardholders can access a form of virtual card through Apple Pay, Google Pay and Samsung Pay.
Citi: Citi allows certain cards to generate Virtual Account Numbers online through its website.
Goldman Sachs: Goldman Sachs offers the Apple virtual credit card.
Netspend: Netspend reloadable prepaid debit cards are not linked to your bank account and offer virtual account numbers through the online platform.
Other options: If your card issuer does not offer a virtual card service, you can sign up for free third-party services such as Privacy.
How to use a virtual credit card number
The exact steps for using virtual credit cards vary by provider, but most follow a similar process.
Step 1: Log in to your online account and search for “virtual numbers.”
Step 2: If needed, download any required software (mobile app, browser extension, etc.).
Step 3: Choose the card you want to create a virtual number for.
Step 4: Set an expiration date and spending limit for the virtual card number.
Step 5: Generate the number, use it for your purchase, and delete it when you’re finished.
Once you get the hang of it, the process should tack just an extra minute on to the checkout process.
It may feel like a hassle. But do you know what’s even more of a hassle? Resolving fraud.
The bottom line
If your credit cards have a virtual number service, all you have to do is switch it on to start protecting your information online. If not, you can use a simple browser extension for free.
It’s not as convenient as saving your card information online for easy one-click checkouts, but for now it’s the price you have to pay for security.
If you’ve never been a victim of fraud in the past, virtual credit cards may seem unnecessary.
But just know — scammers would love to get their hands on your credit card details, and all it takes is one slip.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.