These days, most of our financial exchanges rarely involve paper bills or metal coins.
Instead, we slide a chip-enabled card into a terminal, punch numbers into a keypad or simply wave our smartphones at a contactless payment reader.
Instantly — transaction complete.
A virtual credit card is another modern payment option. It’s an alternate credit card number that replaces the need for a physical card — and keeps your real card digits out of play.
Why choose a virtual card over your real credit card? Two primary reasons: it can better protect your financial details and may even reduce costs.
Security Advantages of a Virtual Card
People often opt for a virtual credit card for enhanced security. Banks and traditional card issuers that offer this feature generate a distinct card number for you to use. When you buy something with a virtual card, the merchant receives that generated number instead of the numbers on your actual card.
Even though your virtual card is tied to your bank or card account, using the substitute number lowers the risk that a data breach or fraud incident will affect your main account.
How a Virtual Card Can Save You Money
Virtual credit cards also give consumers tighter control over spending. These alternate numbers usually have limited lifespans — sometimes created for just one purchase. Some providers let you pick the card’s expiration or set a spending cap. In other cases, you can lock the card to a single retailer.
If your virtual number is valid for a single use, you could employ it to sign up for a free trial without fretting about being billed if you forget to cancel. Or if you limit the card to $50, you can curb an impulsive online shopping spree.
Keep in mind that virtual credit cards are intended for online or phone purchases only. No physical card is produced. That means you won’t be able to present one at a rental counter to confirm a booking, for example.
Where to Get a Virtual Credit Card
There are several ways to acquire a virtual credit card, though the service isn’t yet universal.
Two banks that support virtual numbers are Capital One and Citi. Capital One’s virtual assistant, Eno, supplies customers with virtual card numbers through a browser extension while shopping online. Certain Citi cards include a virtual account number tool that produces randomly generated numbers.
Beyond banks, independent fintech firms also issue virtual cards, including Privacy and Divvy. The startup DoNotPay offers a comparable option that creates virtual card numbers for free trials — and it operates without connecting to your bank account.
Before using a virtual credit card, note that some providers impose fees — for creating a number, per use or for account upkeep. Companies like Divvy and Privacy, though, offer virtual cards at no cost. They typically earn revenue from interchange fees — the charges merchants pay when customers use debit or credit cards.
Nicole Rivers is a senior writer at Savinly.
