Kudos has partnered with CardRatings and Red Ventures for our coverage of credit card products. Kudos, CardRatings, and Red Ventures may receive a commission from card issuers. Kudos may receive commission from card issuers. Some of the card offers that appear on Kudos are from advertisers and may impact how and where card products appear on the site. Kudos tries to include as many card companies and offers as we are aware of, including offers from issuers that don't pay us, but we may not cover all card companies or all available card offers. You don't have to use our links, but we're grateful when you do!
Are Virtual Cards Safer Than Physical Ones?
December 12, 2024
Virtual Credit Cards 101: What Are They and How Do They Work?
Shopping online often means sharing your credit card details with merchants, and that can feel risky. Enter the virtual credit card – a handy tool designed to make online transactions more secure. A virtual credit card is essentially a digital version of your credit card number. Instead of using the 16-digit number printed on your physical card, you use a different, temporary number provided by your bank or a service. This number is still linked to your same credit card account, but it acts as a proxy. If a bad guy ever gets hold of that number, it’s not the “real” number of your account – you can delete or lock the virtual number without affecting your actual card.
Here’s a simple way to picture it: Imagine your credit card account is like a bank vault. Your physical card number is the main key. A virtual card is like a temporary spare key – one that you can give out and if it gets lost or copied, you can immediately change the locks on that spare key, while your vault remains secure. You still get the bill for whatever is spent with that key (since it’s tied to your account), but you control how and when the key can be used.
How do you get a virtual card number? Many major card issuers and fintech services offer them. For example, Capital One has virtual cards through its Eno browser extension, Citi offers virtual account numbers in its online dashboard, and third-party services like Privacy.com or apps (sometimes even your bank’s digital wallet) can generate disposable card numbers for you. Typically, you go into your card account online, click something like “Get a virtual card number,” and the system will create a new card number (with expiry date and CVV) that you can use for online shopping. You might have options to set a spending limit on it or tie it to a specific merchant. Some virtual numbers are single-use (they expire after one transaction), while others can be reused but you can cancel them anytime.
So, if you’re about to buy from a website you’re not 100% confident in, you’d log in, generate a virtual card number, use that to make the purchase, and if anything fishy happens later (like a data breach), you just kill that virtual number. Your main card account remains unharmed and you don’t have to replace your actual card.
Security Showdown: Virtual Cards vs. Physical Cards
Now to the big question: Are virtual credit cards actually safer than using your physical card? The answer is generally yes, for online transactions, virtual cards provide an extra layer of safety. Let’s compare how each fares in different aspects of security:
1. Online Fraud Protection:
This is where virtual cards shine the brightest. When you use your physical card details on a website, if that website gets hacked or someone intercepts that info, your card details could be used fraudulently elsewhere. With a virtual card, the number they steal is not your real card number. Often, it might already be expired or locked to a single store. For example, if you used a single-use virtual number to buy a gadget on SiteX.com, and later SiteX’s database is compromised, the stolen card number is useless – it was good for one use or only on SiteX.
This significantly reduces the risk of broad fraud. Think of it as a safety buffer: your actual card details remain hidden behind the virtual number. According to Experian, virtual cards mask your real card information, so even if hackers obtain the virtual number, your main account stays secure. In this sense, virtual cards are more secure than physical cards for online shopping because they minimize the damage of any single breach.
2. In-Person Transaction Security:
For face-to-face purchases, we typically use physical cards (either by dipping the chip, swiping, or tapping contactless). Virtual cards generally aren’t used in person except via mobile wallets (more on that in a moment). Physical cards have improved security in the past decade thanks to EMV chip technology – the chip in your card also creates a unique transaction code for each purchase, which has largely eliminated the old “magstripe cloning” fraud.
So, when talking chip card vs. virtual card, both use one-time codes in their own way (chip for in-person, virtual for online). If you’re using a mobile wallet in-store, that’s actually tokenizing your physical card (effectively acting like a virtual card for that transaction), which is very safe. But if you hand your physical card to a waiter and they swipe it, there’s slightly more risk (though still low and mitigated by bank fraud protections). Virtual cards are rarely an option in person unless the merchant is willing to type in the card number manually (which is uncommon and might raise eyebrows). So for in-person, the safety is more about using contactless or chip on your physical card.
Edge: In person, neither has a huge security edge – chips and contactless (with your phone or card) are all secure.
3. Risk of Loss or Theft:
A physical card can be lost or stolen from your wallet. If someone finds your card, they might attempt to use it in stores or online. Virtual cards, being virtual, can’t be physically lost. Even if someone got hold of your virtual card number somehow, you likely have control to shut it down quickly. Also, virtual numbers often have limits (you might set it to say $200 max or tie it to one merchant), which curtails how a thief could use it.
Losing your phone that has virtual cards or wallet access is a consideration, but as discussed earlier, phones have locks – a found piece of plastic card has no lock. So in terms of someone stealing the “object”, a virtual card stored in a secure app is safer than a plastic card in that scenario.
4. Data Privacy:
When you use a physical card, you might notice copies of your card number sitting in various places – carbon copies (old school), receipts (some still print full digits, though usually masked), or merchant databases. A virtual card can help minimize how often your real 16-digit number is out there in databases. It compartmentalizes your exposure. For instance, you could use one virtual number exclusively for your monthly streaming subscriptions.
If one of those services gets breached, you just replace that one number. Meanwhile, your physical card number you use for other things remains uncompromised. This approach can be part of good data hygiene. From a privacy perspective, virtual cards let you shop a bit more anonymously – the merchant gets a number that isn’t directly tied to your identity in the same way (though if it’s from your bank, they have your name, etc., but the number itself is disposable).
5. Bank Protections:
Importantly, whether you use a virtual or physical card, banks typically offer zero-liability protection for fraud. This means if your card (virtual or not) is used fraudulently, you won’t be held responsible for the charges as long as you report it promptly. So in either case, you’re financially protected against fraud. The difference is, with a physical card compromise, it’s a hassle – you have to report, get a new card issued (new number), update that number wherever it was saved (bill payments, subscriptions, etc.). Virtual card fraud, on the other hand, might mean you just delete that virtual number and create a new one without any impact on your main account or other autopays. Much less hassle.
Verdict: Virtual cards are safer for online use because they greatly reduce the fallout if your card info is stolen. They act as a shield for your real account. For offline use, physical cards (especially with contactless or chip) are very safe nowadays, and virtual cards aren’t really used offline (except via your phone’s wallet, which again is super safe). So using a combination – physical card in secure ways for in-person, and virtual cards for online – can give you the best overall protection.
Limitations and Considerations for Virtual Cards
Before you vow never to use your physical card again, it’s important to know that virtual cards have some limitations and are not a 100% replacement in all situations:
Limited Acceptance (in certain scenarios):
If you try to use a virtual card number in person, most stores won’t take a “card number” without the card (they’d have to manually key it, and many merchants avoid that due to fraud risk and higher costs). So virtual cards are mainly for online or phone transactions. Also, some online merchants might have trouble if, say, you use a virtual number for an order and then need a refund or to show the card for pickup – you don’t have a matching physical card to present. Generally, refunds go back to the same number (virtual or not) so that’s fine, but something like picking up an event ticket where they ask “show the card used to purchase” could be an edge case hassle.
Recurring Payments and Renewals:
Virtual cards that expire after one use or a short time might not work well for recurring payments (like monthly subscriptions) unless you set them to recur. If you use a one-time virtual card for a subscription and forget, the next month’s payment could fail. To address this, some people use dedicated virtual cards for each subscription with a comfortable limit. There are services that even let you label them “Netflix” “Spotify” etc., so you can track. It’s manageable, but it’s an extra layer of effort compared to just using your main card everywhere.
Not All Banks Offer Them:
While more issuers are adding this feature, not every credit card issuer gives you virtual card capabilities. If your bank doesn’t offer it, you might use a third-party like Privacy.com which creates virtual cards funded by your actual card or bank account – that works, but it’s another intermediary. If a card issuer doesn’t support virtual numbers, you’re out of luck for that card (for example, as of this writing, some big issuers like Chase or Discover did not offer general virtual card numbers, focusing instead on promoting their own digital wallet usage).
Tied to Credit Limit:
A virtual card draws from the same credit limit as your physical card. That means if you set a bunch of virtual cards with various limits, they’re all subsets of your one account. You could, for instance, mistakenly set multiple virtual cards with high limits and overspend your total if you’re not careful. Usually, it’s straightforward (they all just count to the same balance), but users should remember it’s not “new money,” just new numbers.
Expiration and Tracking:
Virtual cards have expiration dates. Some might last a few months or a year. If you have a virtual card number on file with a service and it expires, the payment will fail unless you update it. This is similar to when your physical card expires and you update numbers, but if you create many virtual cards, there’s a bit more to keep track of. Using a management tool or spreadsheet to note what service is using which virtual number can be helpful if you go all-in on this strategy.
Best Practices for Safe Spending (with Physical or Virtual Cards)
Whether you lean on virtual cards or stick mostly to your physical card, consider these best practices to keep your financial info safe:
Use Virtual Cards for Online Shopping:
Especially on sites you’re not familiar with, or one-off purchases. This way if that retailer doesn’t have the best security, you’ve insulated yourself. Some people even use a virtual card for every online purchase by default, which is fine if you don’t mind the process.
Keep Your Physical Card Info Close to the Vest:
Don’t share your card details over email or text, and be cautious of phishing scams. This applies regardless of virtual/physical. If someone calls claiming to be your bank and asks for your card number, it’s likely a scam – your bank shouldn’t need to ask for the full number out of the blue.
Leverage Mobile Wallets in Stores:
Using Apple Pay, Google Pay, Samsung Pay, etc., in brick-and-mortar stores is actually more secure than using the physical card’s magstripe. These wallet payments tokenize your card (similar concept to virtual numbers). So whenever a store accepts contactless, feel free to tap with your phone – it’s quick and safe. Plus, your actual card never leaves your pocket.
Monitor Your Statements:
Whether you used a virtual or real card, review your transactions regularly. Virtual cards can sometimes make this a bit tricky if you have many (you’ll see charges on your statement, often labeled with the virtual card identifier or the merchant – make sure you recognize them). Report any suspicious activity immediately. Thanks to zero-liability policies, your bank will typically handle the fraud, but the sooner you catch it, the sooner it gets resolved.
Update and Use Security Tools:
If your card issuer offers additional security tools, use them. For instance, some cards let you set up spend alerts (like any transaction over $100 triggers a text). These alerts can be early warning systems for fraud. Virtual cards themselves are a tool – use them when appropriate. And of course, keep devices secure: if you store card info on your computer or phone, have proper antivirus, avoid shopping on public Wi-Fi without a VPN, etc. Basic cyber hygiene goes a long way.
Utilize a Service like Kudos for Oversight:
Tools like Kudos can indirectly improve security by helping you manage all your cards in one secure place. Instead of entering your card details on dozens of sites (and risking exposure), you could use the Kudos extension to autofill securely – this reduces the number of places your raw card info is stored. Kudos also keeps you informed about your cards, which can tip you off if something’s awry (e.g., a suddenly maxed out card might indicate fraud – you’d see that on your Kudos dashboard even before an issuer might alert you).
Safety Meets Rewards: Using Kudos for Secure, Smart Shopping
As you navigate the balance between virtual and physical card use, remember that security and rewards are both important. Kudos helps you optimize for both. It’s great to have a secure virtual card, but you also want to ensure you’re earning the best rewards with it. Here’s how Kudos fits in:
Secure Autofill:
When you’re at an online checkout, instead of typing your credit card info (and possibly storing it on that site’s server), you can use the Kudos extension to fill in a card number. If you’ve generated a virtual card for that purchase, you can save it to Kudos temporarily and let Kudos fill it. This way, you don’t accidentally save the card on the merchant site. Kudos keeps your card data encrypted on its side. Essentially, it acts as a buffer much like virtual cards do – an extra layer between merchants and your info. Two buffers (virtual card + Kudos) might sound like overkill, but even using one of the two is a big improvement over raw card entry.
Card Suggestions with Security in Mind:
Kudos might recommend, for instance, “Use your Bank XYZ Visa for this purchase for 5% back.” If that’s a card you have a virtual number for, great – use the virtual version. If not, maybe you decide to use a virtual card from another card. The key is, Kudos ensures you’re not so panicked about security that you forget about rewards, or vice versa. You can confidently shop knowing you’re not sacrificing rewards for safety, or safety for rewards. Kudos bridges that gap.
Centralized Management:
If you end up with multiple virtual cards for different services, Kudos can be a place to keep track. You might label a card in Kudos “Virtual card for X site” as a reminder. This way, you don’t reuse that card elsewhere accidentally. And if you ever need to update or cancel it, you know exactly which account it’s tied to. In a sense, Kudos can act like your virtual card Rolodex. This keeps things organized – which is a part of security too (organized folks catch fraud faster and make fewer mistakes).
Real-Time Balance Updates:
If fraud does happen on any card, seeing an unusual jump in balance or drop in available credit on the Kudos dashboard could alert you even before the issuer’s email arrives. It’s another set of eyes on your accounts. With physical card fraud, they might run up charges; with a virtual card, they might not get far – but either way, you’ll spot it.
To sweeten the pot, don’t forget the $20 Kudos signup bonus (code GET20). When you sign up for Kudos and use it to make a qualifying purchase (perhaps using one of the Boosted offers in the app), you’ll get $20. It’s a nice head start just for taking a step towards safer, smarter credit card usage. Think of it as a little reward for being proactive about your financial security.
In conclusion, virtual cards can indeed offer greater security for online spending than using your physical card details, acting as a shield for your account. Physical cards are still very secure for in-person use, especially with modern chip and contactless technology. The ideal strategy for peace of mind could be: use virtual cards online, use mobile wallet or chip in person, and keep an eye on everything with tools like Kudos. That way, you’re covered on all fronts – and you might even earn a few extra rewards along the way.
Virtual vs. Physical Cards – FAQs
How do I get a virtual credit card number for my account?
It depends on your card issuer. Many banks let you generate virtual card numbers through your online account or their browser extension:
- Capital One: Use the Eno extension to create virtual numbers tied to your Capital One cards.
- Citi: Their website’s Virtual Account Numbers tool will generate a number (you can even set limits or expiration dates).
- Bank of America: Offers temporary card numbers for some cards via their ShopSafe program.
- Wells Fargo, Chase, etc.: Currently do not offer generic virtual numbers (as of latest info) – they focus on wallet tokenization instead.
- Third-party services: Privacy.com, Blur, and other services can generate virtual cards that draw from your bank or card. Even PayPal offers a form of virtual card for some users (PayPal Key, now discontinued in 2022, was an example). If your bank provides it, you’ll typically find it under account services or security settings. Once generated, use that number just like a normal card online.
Are virtual credit cards free to use?
Generally, yes – if your bank offers virtual card numbers, there’s no extra fee to use them. They are a feature of your account. Third-party services might have free tiers and then charge for higher usage or more features. For example, Privacy.com has a free plan for a limited number of cards per month and paid plans for power users. But for most people, obtaining and using a virtual card number won’t cost anything extra beyond what you’re already paying (annual fee of the card, etc., if any). It’s seen as a security benefit provided by the issuer. Always double-check the terms, but it’s rare for there to be a direct fee for using a virtual credit card feature.
Can I use a virtual credit card in stores or only online?
Virtual cards are primarily meant for online, phone, or mail-order use. They come into play when you don’t physically present a card. For in-store, you typically cannot just recite a number – a cashier needs a swipe/chip/tap, or at least to see a card. However, you can use virtual cards via mobile wallets in stores. Here’s how: if you generate a virtual card and add that number to Apple Pay or Google Pay (some banks integrate this seamlessly – the virtual token might automatically route through your wallet), then when you tap your phone, you’re effectively using that virtual card. But practically speaking, most people use their actual card in wallets. So, short answer: online only, with the caveat that tech-savvy workarounds exist for in-person via phone if supported. It’s not as straightforward or commonly done.
Do virtual card purchases earn rewards and benefits like physical card purchases?
Yes – because a virtual card purchase is still a purchase on your underlying credit card account, you will earn the same rewards (points, cashback, miles) and enjoy the same benefits (like purchase protection, extended warranty, etc.) as if you had used your physical card. The transaction shows up the same on your statement, just with maybe an indicator it was a virtual card number. For instance, if your card gives 2% cash back on all purchases, it won’t matter if you used the physical card or a virtual number – you’ll get that 2% back. Issuer systems recognize the virtual card as linked to your account, so everything accrues normally. I use virtual cards regularly and can confirm the rewards post as usual. No worries there!
Is using a virtual card the same as using Apple Pay or Google Pay?
They are related but slightly different concepts. Apple Pay/Google Pay uses your actual card account, but when you add your card to these wallets, they create a device account number (token) which is like a stand-in for your card (so in a way, a type of virtual number specific to that device). When you tap your phone, the merchant gets that token (and a dynamic security code), not your real card. This is why Apple Pay is very secure – it never transmits your actual card number. However, we usually don’t call that a “virtual credit card” in the usual sense, we just call it a token or say it’s using Apple Pay.
A “virtual credit card” generally refers to a number you explicitly generate to use in place of your card for online transactions. So, if you’re using Apple Pay at a store or online (where supported), you are effectively not exposing your real card number, which is similar in outcome to using a virtual card number. But the process and use case differ: Apple/Google Pay is for contactless or for convenience in apps, whereas virtual card numbers are mostly for web checkout forms.
In summary: They both tokenize your card info to protect it, but virtual cards are typically manual for online use, while Apple/Google Pay are an automated tokenization for contactless and some online/app payments. Both are safe – you can happily use either or both for added security.
Double the Cash, Zero the Worry
Looking for consistent rewards without the hassle? The Citi Double Cash® Card rewards you twice: 1% when you buy, another 1% when you pay—for a total 2% cash back on every purchase with no categories to track. Plus, smart balance transfer options help you take control of existing debt. Simple, powerful, perfect for today's savvy spenders.
Editorial Disclosure: Opinions expressed here are those of Kudos alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.
.png)
.webp)
%20(1).webp)
