No, this isn’t some futuristic hologram-type card that appears before you via lasers and graphics. It’s not that cool, but it is convenient. A virtual credit card is a credit card number that is randomly-generated and associated with your existing physical credit card. The purpose is that if you were to enter this randomly-generated credit card number into a website, and it was hacked, that your physical credit card is safe. The randomly-generated card is the one that has been hacked, but you don’t need to ever use that number again and can generate a new one to keep your finances safe.
The two main purposes of a virtual credit card number are security and convenience. The process of cancelling the compromised virtual number and generating a new one is simple.
“Then, if there’s any security issue with the website or company, you can simply cancel that virtual card. You don’t need to worry about thieves making all sorts of fraudulent transactions, because they would just have that one limited number. And you won’t need to report your card information as stolen and get a new card mailed,” says CreditCardInsider.
Here are some of the key benefits of virtual credit cards:
- Protection: if you’ve been compromised on a website or at a retailer, it won’t compromise your true account
- Security: the card details (card number, security code, and expiration date) are completely different from your account info
- Limits: you may be able to set spending limits, which can help improve protection if compromised
- One-use: some virtual numbers can be authorized for a single transaction
A virtual credit card acts as a first line of defense against would-be thieves, and is easily replaced. It’s also useful if you’re purchasing from a website that you’ve never used before, or from a small business that doesn’t offer the level of protection that you’re used to with larger companies.
Here a few large brands that are currently offering virtual numbers for their customers:
Capital One – Eno
Citi – Virtual Account Numbers
Bank of America – ShopSafe