Pros and Cons of Prepaid Virtual Credit Cards
Knowing the pros and cons of prepaid virtual credit cards can provide a sense of safety if you are concerned about privacy and security while shopping online.
There's no question that buying through the internet is an easy way to acquire items you need at the best prices to be found. The drawback is the risk of losing personal financial information or account numbers to thieves who are able to breach the security of online merchants.
Pros of Prepaid Virtual Credit Cards
Your security is assured when you choose to buy using a prepaid virtual credit card. The card can be acquired online and can be funded online. Major credit issuers such as MasterCard and Visa offer virtual cards that can be funded with Paypal.
You can fund your card monthly with a set amount and use that amount throughout the month for purchases. You can never charge more to the virtual credit account than you have funded in cash into that account so overspending is not a risk.
An alternative is to fund the prepaid virtual credit card only when you are planning your purchase. For example, you may need a new refrigerator. You can shop the physical stores near your home and choose the model and brand you prefer. Then, going online, you can look for better prices for that item.
A significant amount of money is saved when you do your comparison shopping online. There's no need to drive anywhere and after scrutinizing manufacturers' websites and product lines, you can search for a particular product to find the absolute lowest price available. Keep in mind shipping costs as many online merchants now offer free shipping for orders over a certain dollar amount.
When you locate the best price, you can fund your virtual credit card for the amount of that purchase. When you make your purchase, the money is immediately subtracted from the prepaid credit account.
If using a standard credit card, you would be adding debt and potential interest charges. More importantly, you might be risking the security of your bank checking and savings accounts associated with that credit card. You also risk theft of your credit card information and unauthorized charges.
Cons of a Prepaid Virtual Credit Card
The only security risk of a virtual credit account occurs if you make the account number available. If you have it written on a piece of paper that is lost or written in an address book that is misplaced, it's possible someone could access the money funded to that account.
The potential loss due to theft, however, would be limited to the dollar amount you have funded in that prepaid account. Unlike standard credit cards, the prepaid virtual card is only as valuable as the amount of money placed in the account by the owner.
Using virtual prepaid cards does limit your ability to make purchases on impulse. This may be a good thing for some of us who tend to buy more than we planned and regret those expenditures. However, if you are buying a planned item and at the last minute decide to add another purchase, you can only buy to the limit funded on the card.
Using a virtual prepaid credit card requires planning ahead for any buys you will make. This is a great budgeting tool and an excellent way to use credit if you tend to overspend on online purchases.
Perhaps the biggest con to use of such a credit account is the lack of reporting to credit bureaus. Although you are using a card with a major MasterCard or Visa logo attached to it (virtually, of course), you will not build credit rating with the use of virtual accounts.
Because the funds are prepaid, there is no revolving credit to report to credit rating agencies. If the goal is to establish or re-establish a good credit report, the standard prepaid credit card would be of more use to you.
Conclusion
If you are concerned about the security of purchasing items online, the prepaid virtual credit card is what you need. By funding a card that exists only in the virtual world of the internet, you are guaranteed safety in buying and greatly reduce any risk of theft. Although the prepaid virtual credit card does not build your credit, it does provide a sense of safety when shopping online.
