Do disposable credit cards provide more online protection?
The holidays usually mean lots of shopping. But even at this time of giving, attention needs to be paid to the budget. Often the best buys are the ones online, and they are also delivered directly to your door. However, many are reluctant to shop online for fear of identity theft. Disposable credit cards have never become popular, but they may be an effective way to shop more securely online.
An alias for your credit card
Disposable accounts are called different things by different carriers. Discover calls them Secure Accounts. Citibank calls them Virtual Accounts. For Bank of America, they are ShopSafe Accounts. However, by whatever name, they all provide an alias for your real credit card number as you shop online. So, each merchant you deal with gets a temporary credit card number. If the site you are shopping at gets hacked, the hacker will receive the disposable number, which, in most cases, expired after its first use.
Very time sensitive
The largest drawback of a disposable credit card account is its short life span. Generally, they expire after 12 months. Therefore, if you used a disposable account for a recurring payment, say to a movie streaming service subscription, you would have to remember to update your payment method yearly.
For some, though, that short lifespan is exactly what is appealing about disposable card numbers. Liz Weston of MSN Money quoted one of her readers’ comments:
“[A disposable credit card] has saved me a few times when a product I’ve ordered has never been received and the retailer has stopped communicating with me about the purchase. The thought of someone having my real credit card is very worrisome. Knowing that the number has a limit and an expiration date is great.”
Are they necessary?
Some say, however, that they provide no real service. Avivah Litan, a data-security expert at Gartner Research, said:
“It was a half-baked solution to begin with. It wasn’t well thought out.”
The reason for that is zero liability. Federal law limits a consumer’s liability to $50 in the case of credit card fraud. Beyond that, credit card companies now use powerful anti-fraud software to flag potential fraud transactions before they post. So, because credit cards are already protected against fraud, many consumers find the extra steps cumbersome and unnecessary.
An extra layer of security
But many remain security-wary and like the extra layer of protection. Each consumer must weigh the advantages and disadvantages for him or herself.