Why digital and physical credit cards are safer than the real thing

Fortunately, there are some simple tools that can improve your credit card security. Known as virtual or digital credit cards, they help protect your real card number and reduce the risk of fraud if your payment information is compromised.

What are digital or virtual credit cards?

Physical and digital credit cards are unique 16-digit payment numbers tied to your primary credit account, but they exist only in electronic format. They allow you to make purchases online or over the phone without revealing the number and other information attached to your physical card.

Virtual credit cards

Virtual credit cards are essentially temporary or disposable card numbers that are specifically generated for online shopping and subscription services. Because they only share this one-time number and not your actual credit card number, they act as a barrier between you and the merchant—any bad actors can block it.

Virtual cards often have usage limits and expiration dates, or are locked after a single purchase, limiting the damage a hacker can do. And if you cancel a virtual card, your credit card account is still active.

Your credit card provider may offer physical cards, although each provider usually has its own settings, restrictions, and rules.

Digital credit cards

Many consumers use digital cards stored in mobile wallets such as Google Pay or Apple Pay for the convenience of using their phones and leaving their wallets at home. But these cards have another advantage: they provide an extra layer of security between your credit account and potential online threats by using a tokenized version of your credit card number.

While no payment method is foolproof, physical and digital credit cards can provide an extra layer of security when shopping online. Many allow you to set spending limits, generate different card numbers for purchases, or use different card details for subscription services. This means less information is shared with vendors, limiting your risk in the event of a data breach.

That said, physical and digital cards are not suitable for all transactions. Using a physical card when booking flights, hotels, rental cars, or other travel services can lead to difficulties if you need to cancel or change your reservation. For those purchases, using your regular credit card is the most practical choice.

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Simple practices that can improve payment security

You can make using physical and digital credit cards even safer by following some safety precautions that apply to online payments of any kind:

• Use cards with low balances limiting how much can be charged without further authorization
• Enable transaction alerts to be notified immediately of new purchases, which helps you spot suspicious activity quickly
• Use a password manager and multi-factor authentication (MFA) to better secure access to your credit card account.
• Use effective password sanityincluding strong passwords and biometric authentication where possible
• Monitor your credit by regularly reviewing your credit reports and checking for unknown accounts or inquiries.

For an extra layer of protection against payment and other types of fraud, consider Equifax Total Protection. This digital subscription service offers a password manager, social media monitoring, data encryption via VPN, credit monitoring, parental controls, device protection, and identity recovery in case of identity theft—all for as little as $34.95 per month.

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About Michael McCullough

Michael is a financial writer and editor in Duncan, BC He was previously managing editor of Canadian Business and editorial director of Canada Wide Media. He also writes for The Globe and Mail and BCBusiness.