What Are Virtual Credit Cards? Best 8 Tips On Digital Cards

You may have heard the term virtual credit card, but really, what is it and what purpose does it serve? In a day and age when the criminal element is getting more sophisticated through technology, you need to be looking for ways to protect yourself from financial theft.

Security and safety are two of the primary reasons that virtual credit cards are becoming so popular. In the following section, the information is going to focus on defining and describing virtual credit cards. In the process, you will learn about the benefits along with some words of caution using this kind of payment option.

What is a Virtual Credit Card?

As a credit cardholder, you have to always be wary of using your original credit card for online purchases. Cyber crime is on the rise. To combat this growing problem, banks, and credit card companies have successfully innovated a product they call virtual credit cards.

A virtual/digital credit card is a temporary card that is tied directly to your original credit card or bank account. The card comes with a “disposable” number and CVV code. Given the card’s temporary status, it is intended for limited use only.

Protects Your Identity

A virtual credit card is best known for protecting your identity and personal data. When you sign up for one of the top virtual credit cards, it is not linked to your regular checking account information. That means that a person cannot access more than your prepaid card balance if they get all your private financial information.

The cards can help keep you safe from hackers who might target a particular store online.

Flexibility For Consumers

There is a certain degree of flexibility consumers get with this type of credit card. Your bank or credit card company could set up your credit card with any of the following limitations:

  • Single purchase only
  • Single merchant only
  • Limited credit/cash availability
  • Limited by expiration date
  • How Do Digital Cards Work?

Exactly how do digital cards work? Let us say you were ready to make a purchase online. To protect yourself, you decide to request a digital credit card number from your bank or credit card company. The card comes with a 16-digit account number, expiration date, and a CVV security code.

Making A Purchase

When you make your purchase, you give the online merchant your credit card information. They will have no way of determining if this is your original card or, in fact, a digital card. Once they run the charges through, the amount of your purchase will show up on your original credit card statement.

Based on the card limitations you request; you can then use the card again or dispose of the card. Then you can request a new card number for your next purchase.

Benefits of Using a Virtual Credit Card

The decision of whether to use a digital credit card is always yours. If you were to choose to do so, you would expect to derive some benefits from it. There are in fact several major benefits you can get by making this choice.

Generating A New Digital Card

When using your original credit card, you run the risk of criminals getting hold of the card number and your personal information. If it happens, you would be forced to close your original credit card account and request a new one.

You would then have to go through the tedious process of changing your credit card number with any merchants or institutions that hold your original card information for automatic payments.

Conversely, when your digital credit card has been breached, you still have to go through the exercise of shutting that card down. However, you don’t have to shut down the original card, which translates to a lot less stress and hassle. Instead, you just ask your credit card company or bank to generate you a new digital credit card number, and you are back in action.

Protection Against Financial Fraud

While a digital credit card is technically tied to your original card, it does not provide a gateway to your personal information. The only things merchants see unless you provide more is your name and credit card information. That limits your exposure to rogue activities to nothing more than what a criminal can get off your card in terms of payments.

Fair Credit Billing Act

To protect you against the financial ramifications of fraud, you are still afforded protection via The Fair Credit Billing Act limits, which serves to limit your liability for unauthorized use of a credit card to just $50. That is in total, not per transaction. Depending on the terms and conditions surrounding your original credit card, your total exposure could be as low as $0.

Using a Digital Credit Card

Should you choose to use digital credit cards instead of exposing your original card, you must do so with some discretion. Why? Well, there are some things to think about before using this type of credit card. Remember that a digital credit card is only useful for online transactions.

If you were to visit a brick-and-mortar retail store, you would need to use your physical original credit card to make any purchases.

There is the potential of running into problems should you need to return merchandise, wanting a refund in the process. A lot of merchants are more than happy to provide refunds, but they usually want to credit the money back to the credit card number that served as the source of payment.

If you had used a digital credit card number that expired or had been disposed of, the merchant would not be able to issue your refund.

Can I Use A Digital Card For Subscriptions?

There is a need to be careful of paying for subscriptions or membership dues with digital credit cards. At issue would be the expiration date of the card. Since they are limited use cards with short expiration dates, you would run the risk of your subscription or membership being canceled due to nonpayment issues.

If you are good at remembering to update the card information, then it will be fine to use your digital card for your subscriptions.

Looking for a Digital Credit Card?

If you are interested in using a virtual credit card, you should contact your bank or credit card company. As a growing service, it is very likely your financial institution will be able to help you. Be sure to use discretion when using your digital credit cards and you can derive all the benefits mentioned above while also avoiding the pitfalls.

As for the best digital credit cards, it would be a matter of which institutions you trust and the benefits that go with the underlying original credit card. The criteria you should use to select a good credit card are the card’s APR, rewards, and payment requirements. Most of the nation’s top financial institutions offer a wide range of cards with varying options.

Payoneer Virtual Credit Card

Payoneer is an alternative payment method that allows you to make quick purchases online. The virtual credit card allows you to pay using money already in your bank account. It allows you to connect with online vendors, and you can set your spending limits. It’s also very easy to get this virtual card as long as you have an account with them.

Netspend Virtual Credit Card

NetSpend allows you to pay bills or purchases with funds present in your NetSpend without having to share your personal information. You can use it to shop over the phone or withdraw cash at ATMs worldwide. The card allows you to separate personal and business expenses, making your life smoother at tax time.

American Express Virtual Credit Card

If you are looking for a virtual credit card that is easier to get and use, American Express has your answer. It offers an online prepaid MasterCard that you can use anywhere in the US where other cards are accepted. Like other cards, the card has CVV, a billing code, and a 15-digit number. It allows you to control your spending and track every transaction you make on the card.

Walmart Money Card

Walmart Money card allows you to top up your card using any bank available in the country. You can then use the money to shop from any store and pay without hindrance. The card offers free cash reloads, and you stand a chance of getting 2% interest on savings.

How You Can Get These Cards

You can get a virtual credit card by signing up with an online application. Once you enter your personal information and agree to the terms of service, you will use the card. Ensure you read all the terms that apply before signing up for a specific company’s prepaid card to know any fees or requirements.

Once you sign up for a virtual credit card, it is recommended that you activate it immediately. This way, if anything happens while shopping on another site, your new credit card number will be available to enter.