Virtual Credit Cards Save You Money From Unwanted Charges

With credit cards becoming more common, it is now more convenient than ever to make online purchases. By just knowing a few numbers, you can make purchases in the moment, or sign up for reoccurring subscriptions. However, that convenience in of itself has created a new problem.

We are providing so many different vendors with our credit card information, that it is sometimes hard to stay on top of what they will do with them. Credit card theft is certainly one thing to be concerned about, but there are also less illegal things:

• Auto-enrollment into extra services
• Auto-enrollment into monthly subscriptions
• Sudden increases in fees from services you are auto-paying for
• Unexpected charges
• Selling data to third-party vendors
• Vulnerability to credit card theft

These are all risks that you are exposing yourself to when you provide your credit card number to a merchant. The underlying cause is the fact that a vendor has your credit card information; they can use that information at anytime to place a charge on your next bill. Whether the charge is fraudulent or just a simple mistake, the fact that you have to resolve an unintended charge creates a litany of inconveniences you now have to spend time and energy into reconciling!

Credit Card Fraud Protection

Fraudulent and unwanted charges have become less worrisome than in the past. Almost all credit card companies provide you with Fraud Protection. As long as you catch the charge in your bill and report that charge as fraudulent, the bank will usually start an investigation to resolve it. However, this is not a sure thing.

The bank will first ask you to try to resolve the issue with the merchant themselves. This usually means you have to talk to someone and prove to them that you were charged incorrectly. Ideally, you’ll have receipts or some sort of proof that you didn’t make that particular purchase. If for some reason you are unable to contact or resolve the issue with the merchant, the bank will step in and investigate. This process may take a few weeks depending on the bank. While you will not have to pay for the charge, you may also have to be aware that the charge can come back later on if the bank fail to investigate and support your claim.

Going through the process to claim a credit card’s fraud protection benefit can be frustrating. Moreover, if the unexpected charge was not due to fraud, but a mistake such as forgetting to cancel a reoccurring charge, then there is little this benefit can do for you.

Using Virtual Credit Card Numbers

The solution to our problem is to use virtual credit card numbers that can be created ad-hoc for specific merchants ane linked to your actual credit card. This way, the vendor does not actually have your real credit card number in their system; they only have the credit card information that you want them to specifically have.

In addition, you can create an unlimited amount of virtual credit card numbers and manage how they can be used. This protects your privacy as well as avoid potential issues and headaches down the line.

Virtual Credit Cards Protect Against Credit Card Theft

The consequence of credit card theft is that the thief could now make charges in your place with that information. However, what if the thief cannot do anything with that information he stole? When using a virtual credit card number at a specific merchant, you can configure that number to only be usable for that specific merchant.

For example, let us assume I used a virtual credit card for a purchase on amazon.com and a thief steals that information. He can have the credit card number, date, and security code. However, when he goes around and uses that information to buy himself gift cards at Best Buy or Walmart, the credit card number will be declined. That virtual credit card number has been configured to only work on amazon.com.

The fact that you can create a virtual credit card number specific to a vendor can help you avoid a lot of potential headaches. Not only are you more protected from credit card information theft, but if a vendor passes along the information intentionally to a third party, they would also not be able to create any unexpected charges.

Virtual Credit Cards Protect Against Unintentional and Reoccurring Charges

There is clear justification to resolve fraudulent credit card charges. However, when charged with legitimate unintentional or reoccurring charges, there is often less justification to refund that charge. This happens more commonly than you’d expect and virtual credit cards can protect you from these problems. .

Netflix Subscriptions Example

For example, let’s look at auto-subscriptions for Netflix. Netflix has my credit card information and would charge it once a month on the first of the month. I know in March that I would be too busy in July to watch Netflix, and should cancel the subscription then. However, come July 10th, I realized I had forgotten to cancel by subscription. I have not used my Netflix account at all, but I have no ground to stand on to return that monthly charge for July – it was my unintentional mistake. Maybe i can ask them to pro-rate a refund for the remainder of the month. This is money I could have saved for use elsewhere.

Reoccurring Services Example

Another example with reoccurring services – let’s take a look at my wine club subscription. The first box that they shipped me was great; about $45 for 6 really nice bottles of wine. However, for the second shipment, they said they would charge me $120 for 6 bottles; I want to make sure I cancel the service before then. However, I only remember about the second shipment after they had sent me an email saying I’ve been charged, and the shipment is on its way. Again, in this situation, I do not have any justification to stop the charge since the shipment is already on its way. There’s also no way for me to return that shipment without incurring additional costs.

Virtual Credit Cards can Save You Money from Reoccurring Charges

Virtual credit cards solves both these situations by simply managing whether they will be “activated” for the vendor. Using my earlier example, if after the first monthly charge with Netflix, I had “deactivated” my virtual credit card assigned to Netflix, Netflix would not be able to charge me. I don’t have to worry about forgetting to cancel any services in the future if I simply deactivated the credit card information they have.

You may ask why not just cancel the service immediately? The answer is that for many vendors, they are not able to schedule your cancellation in the future and can only be applied to your account immediately. Furthermore, if the vendor knows that you will be canceling in the future, that knowledge might negatively affect your ongoing services before that time.

Where Can I Get Virtual Credit Cards?

If I have convinced you to start using virtual credit card numbers, that great! So how can you set one up?

Capital One

If you’re currently a customer of Capital One, it is as simple as downloading a chrome extension. Once you’ve installed the application, you can now configure specific virtual numbers for a merchant (like Netflix) , and tie that number to specific credit cards. Furthermore, you can also choose to “activate” , “lock”, or even delete that virtual card whenever you want.

American Express Go

If you are an American Express customer, you can check out American Express Go. Unlike Capital One’s service, American Express Go is more targeted around creating virtual credit cards for businesses managing employee expenses.

Therefore it is also a more sophisticated where you can create profiles for each employee and their own virtual credit cards. You can also choose to send out physical copies of those cards. All virtual credit cards can be managed and used to track all transactions and expenses.

Other Services for Virtual Credit Cards

Without getting into too much detail on these other services, checkout some of these other options:

• US Unlocked – https://www.usunlocked.com/
• Privacy – https://privacy.com
• Airtm – app.airtm.com
• ecoVirtualcard – https://www.ecopayz.com/en/prepaid-cards/ecovirtualcard
• Brex – https://brex.com/
• Emburse – https://www.emburse.com
• Divvy – https://getdivvy.com
• iCard – https://icard.com/

Bottom Line

Getting into the habit of using virtual credit card numbers is a great way to protect your finances, your privacy, and your time. There is a lot to say about having more control of your spending through your credit card; in today’s cashless society, strong credit card management is critical in both spending and saving money.