What is a virtual credit card?

Woman looking at her phone and learning about virtual credit cardsImage: Woman looking at her phone and learning about virtual credit cards

In a Nutshell

With some credit card issuers, you can get a unique, virtual credit card number that links to your main credit card account. Using a virtual credit card may help protect you against fraud when you shop online or by phone — or in the event of a big data breach.
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Virtual credit cards are unique credit card numbers that allow you to transact on your main credit card account without exposing your account number to data breaches or fraud.

A virtual credit card allows you to limit a credit card number for use at a single merchant. You may also be able to specify a spending limit or a particular expiration date for a virtual credit card.

Additionally, the issuer of a virtual credit card number may allow you to lock or delete a particular virtual account number if you worry that sensitive information has been exposed. This helps prevent fraudulent purchases without affecting your main credit card account. Then, you can create a new virtual account number to continue making purchases at that merchant.

All of this gives you, as the cardholder, some ability to try to protect your main credit card account information in a world where data breaches and identity theft are an unfortunate reality.

What are the benefits of virtual credit cards?

The main benefit of virtual credit cards is the additional layer of protection they can offer for online purchases. If your main account number is exposed in a data breach because you didn’t use a virtual credit card, you’d have to get your main credit card account number reissued. That means you’ll get a new account number, which you would then have to update with every vendor you’ve set up recurring payments with using the card number that was exposed. You’d also likely need to wait to receive a new physical card in the mail.

Instead, the virtual credit card feature allows you to keep your main credit card account open while still closing the unique account number that was on file with the affected vendor. This mitigates the risk of your main account being exposed in a data breach. It also saves you the hassle of tracking down and updating your recurring payments with vendors other than the one affected by the breach.

Also, if you want to focus on limiting your spending with certain merchants, a virtual credit card can help with that, too. Depending on your card issuer, you may be able to set up a virtual account number with the spending limit you have in mind. Once you reach that limit, you won’t be able to make any more charges with that account number.

How much fraud am I liable for when using a credit card?

The Fair Credit Billing Act limits your liability for unauthorized use of a credit card to just $50. However, the limit can be as low as $0. To ensure you aren’t responsible for any unauthorized charges, you must properly notify your credit card company that your card has been lost or stolen — before any unauthorized charges are made on the card. As long as you do this before unauthorized charges are made, your liability will be reduced to zero. Additionally, you aren’t liable for unauthorized use if just your credit card number, not the credit card itself, is stolen. Take note: In practice, many major credit card issuers do not hold you liable for any fraudulent purchases.

The downsides of virtual credit cards

Returning items you order online to a physical location could be a challenge with virtual credit cards. This is because some stores require you to insert or swipe the card you used for the purchase to process your refund back to your card. The time it takes for a refund to show up on your credit card varies by vendor and card issuer. 

This obviously isn’t possible with a virtual credit card. In these cases, you may have to accept store credit instead of receiving the money back on your credit card.

Finally, virtual credit cards that have short expiration dates can cause issues for subscriptions. To keep your subscription active, you’ll have to update the virtual credit card information each time it expires. If you forget, your subscription could be interrupted, leading to even more steps to reactivate with a new virtual credit card number.

How can I get a virtual credit card?

After reading everything in the previous sections, you may be wondering which banks or lenders offer virtual credit cards. Here are two major issuers that offer virtual credit cards and what you need to know about each program.

Capital One Eno

Capital One offers virtual credit cards and additional 24/7 customer support through its online assistant, Eno, a web browser extension.

After the extension is installed, you can use it to shop as usual. When you’re ready to check out, click on the browser extension button and generate a virtual credit card for use at that particular merchant.

The extension can also redirect you to Capital One’s website where you can manage, view, lock or delete your existing virtual account numbers.

Citi virtual account numbers

Citi offers virtual account numbers for select cards through a web-based tool or a downloadable program for PCs. With Citi’s tool you can generate virtual account numbers with dollar limits and set expiration dates.

You can also view individual virtual account number information, including purchases made with virtual account numbers. Additionally, you can close individual virtual account numbers with this tool from Citi.

Note that Citi virtual account numbers can only be used for online and mail-order transactions.

Next steps

Virtual credit cards might give you some peace of mind when making purchases online or on the phone. Should your virtual credit card number get compromised, you can typically delete or lock it with a click and continue using your main credit card.

If you’re worried about getting caught in a data breach — and having to close a main account number that has a bunch of recurring payments attached to it — you’ll probably appreciate the extra measure of protection virtual credit cards are meant to provide.

That said, the process of obtaining virtual credit card numbers can be a minor hassle — and credit card issuers that offer virtual credit cards may also offer $0 fraud liability policies.

And remember that there are some steps you can take immediately if you’re a victim of credit card fraud.

About the author: Lance Cothern is a freelance writer specializing in personal finance. His work has appeared on Business Insider, USA Today.com and his website, MoneyManifesto.com. Lance holds a Bachelor of Business Administration in … Read more.