What Are The Benefits of Virtual Credit Cards?
The Benefits of virtual credit cards have been available for several years. These cards are also referred to as controlled payment number accounts and provide consumers with a layer of protection that cost nothing to use.
How the Virtual Credit Card Works
You can sign up for one of many virtual credit card programs offered by major lenders such as Discover, Citibank and Paypal. You will be asked to download a piece of software. After the download, you can enter your credit card info and generate a new credit card number immediately that can be used for an online purchase.
Some virtual cards will generate a number that is only good for a small spending limit or have a limited period of time before an expiration date. Some numbers will be good for one online purchase only while other accounts allow multiple purchases from one vendor. Only your bank and you will know your real account number as the merchant sees only the virtual temporary number you generated.
The Benefits of Using a Virtual Card
The temporary account number you generate and use for a one time or one vendor purchase is useless to hackers. Even if a hacker obtains the account number it will not be useful to him as it cannot be used again.
Because the virtual card will have a spending limit that reflect the purchase you intend to make, your real account and full credit line are not at risk when you buy online. The temporary number does not lead to your real credit card number no matter what a hacker does.
Using a virtual card for online purchases does not expose you to the risk of identity theft that is a rising problem in the marketplace today. Identity theft relies on the ability of the thief to match various pieces of information that you have placed online. If a hacker is unable to find information that leads to your credit file or your bank account, he is unlikely to be able to use your identity.
The Popularity of Virtual Credit Cards
It is surprising that virtual cards are not widely used by those making purchases online. This lack of popularity is due to two factors.
You may feel generating a new account number is cumbersome and not want to bother with it each time you place an order online. Truth is, generating a new number has become easier with new technological advances in software.
If your credit card number is stolen and used you are liable only for the first $50 charged to it. You may think this protection is enough and thus avoid using a virtual credit card number for purchases.
The benefits of using a virtual card account go beyond the liability issue. It’s true you are only on the hook for $50 if someone steals your account number and uses it for a shopping spree. The problem is that theft of one credit account number can be the missing piece that leads to theft of your entire identity.
There are currently no streamlined solutions for someone who is a victim of identity theft. You are often required to prove your identity was stolen. In addition, although credit rating agencies are required by law to correct bad info in your credit file, they may not make any corrections until after you have taken legal action to clear your name. Identity theft is a big problem and has caused severe financial hardship for many people who find their credit has been ruined through no fault of their own.
Conclusion
If you buy items online, the benefits of virtual credit cards can save you from potentially harmful financial consequences. It only takes a few seconds to generate a virtual account number that cannot be hacked or traced to you and that few seconds can save months of hardship should you become a victim of identity theft.