Virtual Credit Cards 101

Protect Yourself with Single-Use Credit Card Numbers

Virtual Credit Cards 101
November 27, 2014

Data breaches are a common occurrence in the headlines these days. Whether you're using your credit card online at Target, Home Depot or one of many other recent data breach victims, you really have to stop and think twice about whether your identity and credit card information are safe.

Luckily, some credit card issuers have a method that you can easily use to reduce the likelihood that your main credit card account information is stolen from online merchants: Single-Use Credit Card Numbers. The concept is not new, but Single-Use Credit Card Numbers are a very effective way to combat potential data breaches. The details of how they work depend on which bank issued your credit card, but most offer a vast improvement in security over simply entering your real credit card number for an online purchase.

Currently, only Citi and Bank of America issue Single-Use Credit Card Numbers for current cardholders (Discover stopped their program in early 2014). Citi calls their program "Virtual Account Numbers" and Bank of America's program is called "ShopSafe®". Instead of inputting your real credit card number when you make a purchase, Citi or Bank of America will give you new credit card information to use for a particular purchase.

In order to obtain a Single-Use Credit Card Number, you simply log in to your credit card's website and provide the maximum amount you want charged to your Single-Use Credit Card Number and when you want it to expire (up to one year in the future). The system will then generate the Single-Use Credit Card Number, security code and expiration date based on your desires. The information can only be used with one vendor but it can be kept on file for monthly payments for services such as Netflix as long as you provide sufficient funds and future expiration date. The Single-Use Credit Card Number will be linked to your main credit card account number, but the vendor will not have any of your main account information.

Single-Use Credit Card Numbers protect you in a few key ways. First, the vendor will never have your main credit card account information. Since you are providing them with only a throwaway single-use number, the largest possible fraudulent purchase will be based on the dollar limit you set. If a hacker breaks into the vendor's credit card information files, you won't have to worry about your account number floating around on the black market since it cannot be used with any other vendors.

Second, you will be protected from fishy vendors. If a site looks like it might be scammy, you can limit them from using your main credit card account information elsewhere. You will be able to limit the amount of money they can charge to your account, as well as prevent them from using your information elsewhere.

Of course, most credit cards available today offer protection from fraudulent purchases as long as you notify the issuer within a certain period. However, there can be a lot of hassle involved with credit card fraud in being made whole, stopping your card, getting a new card issued, and changing every account that relied on the old number. Using a Single-Use Credit Card Number takes a little effort, but can provide great peace of mind.

Learn more about Single-Use Credit Card Numbers at Citi and Bank of America.

If you want more credit, check out MoneyTips' list of credit card offers.

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