{"id":9257,"date":"2022-08-29T09:00:00","date_gmt":"2022-08-29T15:00:00","guid":{"rendered":"https:\/\/www.lexingtonlaw.com\/blog\/?p=9257"},"modified":"2024-05-06T13:31:25","modified_gmt":"2024-05-06T19:31:25","slug":"what-you-need-to-know-about-virtual-credit-cards","status":"publish","type":"post","link":"https:\/\/www.lexingtonlaw.com\/blog\/credit-cards\/what-you-need-to-know-about-virtual-credit-cards.html","title":{"rendered":"What you need to know about virtual credit cards"},"content":{"rendered":"\n
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A virtual credit card is a one-time, randomly generated 16-digit credit card number you can use for purchases. Using a virtual credit card can help you prevent identity theft.<\/h2>\n<\/div>\n\n\n\n

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice.<\/em> See Lexington Law\u2019s editorial disclosure for more information.<\/em><\/a><\/p>\n\n\n\n

A virtual credit card allows you to make purchases online or by mail or phone without divulging your physical credit card number to merchants. It\u2019s safer than using your actual credit card, because a virtual credit card uses a temporarily generated number.<\/p>\n\n\n\n

What are virtual credit cards, and how do they work?<\/h2>\n\n\n\n

A virtual credit card is a one-time, randomly generated 16-digit credit card number you can use for purchases. The main purpose of using a virtual credit card as opposed to your \u201cregular\u201d credit card is to reduce identity theft<\/a>. <\/p>\n\n\n\n

The way virtual credit cards work is quite simple. The process may vary somewhat depending on the bank that issues your credit card, but essentially, you log in to your credit card account and choose the option to generate a virtual credit card, if your credit card provider allows it. After setting an expiration date and the maximum amount of money that can be charged, you receive a temporary 16-digit number to use with online merchants or with mail or phone purchases. <\/p>\n\n\n\n

Currently, Citi and CapitalOne are the two primary providers of virtual credit cards, but there are other card issuers who have similar offerings.<\/p>\n\n\n\n

Benefits of virtual credit cards<\/h2>\n\n\n\n

There are a number of benefits to using a virtual credit card over your physical credit card number. These include:<\/p>\n\n\n\n

  • There is a preset card expiration date:<\/strong> Because you assign an expiration date, no one will be able to make a charge with your card after the set period of time has elapsed. The time can be as short as 24 hours, so even if a merchant with your virtual credit card number was hacked days after you made a purchase with them, you wouldn\u2019t have to worry. <\/li>
  • Only the primary cardholder gets the virtual card option:<\/strong> A secondary cardholder on your account can\u2019t generate and use a virtual credit card. This enhances the security of the virtual credit card, as the primary user is the only one who can take advantage of this option.<\/li>
  • It can\u2019t be traced back to your physical card:<\/strong> It\u2019s almost impossible to link a virtual credit card number back to your physical credit card number. If an identity thief gains your virtual credit card number, your physical credit card shouldn\u2019t be compromised. If the virtual credit card number has expired already, there\u2019s zero risk to you if it falls into the hands of an identity thief, as the thief can\u2019t charge anything to an expired virtual credit card number.<\/li>
  • There is a maximum spending limit:<\/strong> You can set a maximum amount for your virtual credit card. If your virtual credit card number is active and you\u2019ve set a $50 limit on your virtual card, an untrustworthy merchant or an identity thief can\u2019t charge more than that to the number.<\/li><\/ul>\n\n\n\n

    Drawbacks of virtual credit cards<\/h2>\n\n\n\n

    Although there are times when using a virtual credit card is a good option, there are a number of situations when using a virtual credit card isn\u2019t possible.<\/p>\n\n\n\n

    • Virtual credit cards are limited to online, mail or phone purchases:<\/strong> Virtual cards don\u2019t work if you\u2019re making a purchase in person, as there\u2019s no physical card to tap or swipe at the payment terminal. That means you\u2019re limited to using virtual cards online (or if you\u2019re paying for something by mail or phone).<\/li>
    • Obtaining refunds may prove tricky:<\/strong> If you purchase something online using a virtual credit card and need to return it, it may be difficult for the merchant to issue a refund.<\/li>
    • Virtual credit cards often require online accounts:<\/strong> You need an online account with your credit card provider for them to issue you a virtual credit card. If you usually pay your balance by mailing a check and aren\u2019t comfortable using online banking, a virtual credit card may not be a good option.   <\/li>
    • Not all credit card providers offer virtual cards:<\/strong> Check with your credit card provider to see if it offers the service, as it\u2019s not an option with many companies.<\/li>
    • Virtual credit cards are not 100 percent fraud preventive:<\/strong> Although more secure than physical credit cards, you can still be charged if someone obtains a virtual credit card number that hasn\u2019t expired or hasn\u2019t yet hit its maximum spend. <\/li>
    • Purchases made online but picked up in person could get confusing:<\/strong> If you purchased an item online and went to pick it up at a merchant that requires you to show your credit card, there might be confusion as to how to complete the transaction. Similarly, if you paid online for a hotel reservation and at check-in were required to show the credit card you used, you wouldn\u2019t be able to do so, and you\u2019d have to explain the situation to the hotel.<\/li><\/ul>\n\n\n\n

      How is a virtual card different from a digital wallet?<\/h2>\n\n\n\n

      Digital wallets like Apple Pay, Google Wallet and Samsung Pay store your credit or debit card information on your phone and in the cloud. Unlike a virtual credit card, you can use a digital wallet to pay in-store (if the merchant accepts digital-wallet transactions), or you can use a digital wallet as a service to pay friends and family (similar to Venmo).<\/p>\n\n\n\n

      When you use a digital wallet in-store, the app on your phone generates a virtual card number to pay the merchant. In this regard, digital wallets are similar to virtual credit cards because a temporary card number is being used.<\/p>\n\n\n\n

      But unlike a virtual credit card, a digital wallet may not have the protection of being a temporary number or having a maximum limit. If someone was able to physically take your phone and knew your digital wallet\u2019s PIN, they could use your digital wallet to make purchases at a store.<\/p>\n\n\n\n