Using Credit Cards Online

Posted on September 6, 2007 by Eric
Filed Under Credit Cards, Security, Shopping

This article is part of the Securing Your Money Online series.

Let’s face it, some of the best deals you’ll find on the stuff you need (or want) can be found online. You could find yourself shopping all over the Internet at online stores you’ve never even heard of before finding fantastic bargains. But then you have to wonder if the sites are legitimate. Do they have good security? Will my credit card information be safe?

There are things we can do in the virtual world to protect ourselves from credit card fraud. You’ve probably read a story or two about credit card information being stolen from an online store. In some of these cases, hackers were able to break into the store’s databases by exploiting various insecurities in the shop’s website or network setup. In other cases it could have been an employee stealing this information. Either way you could be at risk. If you shop online and you use a credit card for purchasing there are ways to minimize the impact. One of those ways is to use virtual credit cards.

Virtual credit card numbers, also called one-time use, single-use, controlled payment number, or disposable credit card numbers, are an easy and effective way to help avoid the hassle of dealing with fraudulent charges. A virtual credit card number is basically an alias for your real account number, keeping your real account number private. If that store happens to get compromised, they won’t even know what your real account number is. Your virtual credit card number can be customized to restrict the credit limit or expiration date.

Depending on your bank, you may or may not even have the option to use a virtual credit card. If you shop online, I recommend you look for this feature when you are evaluating credit cards. My credit card is with Citibank and they support the use of virtual credit card numbers. Other banks, such as Discover and Bank of America, also have these capabilities with their cards. With Citibank, you can use their software applet in Windows to create a new card, or their online web interface if you need to generate a card number with a Mac or Linux box.

Generating a virtual credit card number is simple. Here is a short example of using a virtual credit card generator, specifically Citibank’s version.

Using a Virtual Credit Card Generator

After you login, you will get a screen which shows you all the options available, including viewing past cards and generating a new card. We start by clicking on “Generate Virtual Account Number”.

If you click “OK” on the next page, Citibank will generate a virtual credit card number with no spending limit which expires the following month. I rarely use this option. Instead, at this menu I select “Advanced Options” at the bottom.

With the “Advanced Options” menu, you have two options. You can create a card with a spending limit (which I always set) or you can create a card that has a spending as well as a time limit (which I select for cards I am using for recurring expenses such as Vonage).

Once you generate a card, you get the 16 digit card number, a CVC (3 digit card verification code), and the expiration date. If you are using Windows and the Citibank applet, you can have the applet automatically enter the payment information into the shopping checkout form you have up in your browser.

Although the example uses Citibank, Discover seems to use the same software (according to Wikipedia, they both use Orbiscom).

You may be thinking, “but why would I do this when I’m not liable for fraud on my card anyway?” For me, this feature adds peace of mind. If a virtual credit card number is stolen, I can look back at the logs and see exactly which merchant I used that card to purchase from. On top of that, they are restricted in how much they can charge due to the limits I set on the card. I don’t have to worry about someone maxing out the card and screwing up any automatic charges I have set up on it.

Using a Debit Card Online

If you normally use a debit card, I highly recommend you don’t use it online. Not only is this tied to your banking account with your real money, these cards don’t always offer the same protections as credit cards. If someone gets a hold of your debit card information and manages to spend all the cash from your bank account, you may be unable to access it until the bank finishes their investigation into the matter. It’s your money on the line, not necessarily the bank’s.

If you aren’t using virtual credit card numbers for your own online shopping, I highly recommend you give them some serious consideration. Now I feel I can be even more frugal by selecting the best deals I find online without having to worry as much about my credit card number being stolen. If you don’t have a card with one of these banks, or can’t use virtual credit card numbers for some reason, my recommendation would be to avoid using your credit card online except for at established online stores. In the end, you should only be liable for a small amount, but dealing with the hassle just doesn’t seem worth it to me. You can make your own decision as to how much risk you are willing to take with your credit card. We’ve got a friend who’s had her credit card number stolen 3 times from online stores. 3 times. Now, she only uses virtual credit card numbers online. For me, it’s a feature that is indispensable and I wouldn’t shop online without one.

Virtual credit cards – don’t shop online without one.

Comments

2 Responses to “Using Credit Cards Online”

Janni on March 25th, 2008 8:43 pm

Nowadays, almost every available type of credit card has some type of reward connected with it. Offering perks and freebies is the number one method used by credit card companies for soliciting business.
prince(new comment) on October 6th, 2008 8:11 am

where can get the site to register or login Using a Virtual Credit Card Generator.
please i need the site to be registered with

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