Monday, May 04, 2009

Virtual Credit Cards

After suffering from one too many online credit card fiascos and ripoffs, we began researching virtual credit card numbers. (In the past month, we had a disputed charge with Earthlink, we had one of our credit card numbers used by some scumbag, and we received a letter from about a security breach of their computers.)

Virtual credit cards are one-time or short-term numbers that are created by your credit card company and can then be used for an online transaction. These temporary numbers can be time-limited and amount-limited.

We have found the service offered on most Bank of America credit-card accounts, and on some Citi accounts. (Discover also apparently offers the service, but we don’t have any Discover cards to test it out.) Charges on the virtual cards go right to your normal credit card statement, and carry the same purchase and fraud protections that your card offers.

Of course, this adds a small level of complexity to your online shopping, but may be worthwhile for purchases from unfamiliar merchants. Also, we see this as a way to stop unauthorized recurring billings and card-number theft, since the virtual card has a dollar limit. Once you feel confident with a new merchant, if you choose you can use your regular card number for future transactions.

You can use a virtual credit card any time you don’t have to present a physical card. Which means, of course, not to use it for airline tickets, hotels, or car rentals, as you will probably have to present your card at the counter.

Another small benefit, surprisingly, is that using a virtual credit card number requires you to log in to your card website to obtain the number. That also gives you the opportunity to check all your charges and balances more frequently – something we should all be doing more often.