Considering a masked credit card? How to know if it's right for you
Our culture’s reliance on online payments has complicated the nature of digital privacy. Today, we go online to pay for everything from utility bills and cleaning services to new shoes and movie tickets. And though mobile and online payments make daily life more convenient, they also put your privacy at risk.
The 2019 RSA Data Privacy and Security survey found that 78% of consumers were most concerned about losing control over their financial information when compared to other types of personal information. With online payments, you don’t just have to worry about individuals attempting fraud. You also have to trust the companies you give your financial information to.
The rise in data breaches makes this an increasingly difficult task. According to the 2019 Thales Data Threat Report, 65% of companies have experienced a breach at some point, and 36% have experienced a breach in the last year. In response to breaches and fraud, banks and companies have started offering masked credit cards to consumers who want more privacy over their financial details.
How does a masked credit card work?
A masked credit card is the digital equivalent of a plastic credit card with one main difference: more privacy. A masked credit card gives you a temporary credit card number you can use to make online purchases. The appeal of masked credit cards — also called “virtual credit cards” — is that they look and operate like regular cards, but don’t contain any of your real credit card information. As a result, neither merchants nor fraudsters can see your financial details, so you’re less vulnerable to fraud and data breaches.
Depending on the issuer and type of masked credit card you sign up for, you can either use your card for multiple payments or for a single purchase only. When you’re shopping or paying a bill online, you simply input the credit card number, expiration date, and security code on your virtual card. The charges will then go to your preferred credit card or bank account where you can pay them down as usual.
Are masked credit cards safe?
Masked credit cards are a safe, effective payment option. In fact, many people consider virtual cards safer than standard credit cards, simply because they keep your financial details hidden from online merchants and potential hackers.
However, that doesn’t mean masked credit cards are foolproof. Even when using a masked card, it’s important to review your online purchase history to check for fraudulent charges. If your masked credit card is good for one year of use, for instance, someone attempting fraud could access your card details and use them to purchase something on your account. The good news, though, is that whoever attempts fraud on your masked card still won’t have access to your primary credit card or bank account, which means your financial information will remain private.
As with any online account, you run the risk of sharing personally identifiable information (PII) when you sign up for a masked credit card. For example, if you use a masked card service, you have to give that company your billing address. What’s more, you have to trust that organization to keep your information private.
That’s why it’s crucial to weigh the risks with the potential benefits of using a masked card. It may be a worthwhile trade, for example, to dole out one piece of PII to one company instead of sharing your credit card information with countless online merchants.
What are the benefits of using a masked credit card?
Using a masked credit card can give you peace of mind and extra protection when making online purchases. A masked card doesn’t just protect your identity and help prevent fraud, it also reduces the risk that PII other than your financial details will be exposed.
A masked credit card essentially acts as a shield for your main credit card account. In the event of a data breach or fraud attempt, your masked credit card takes the hit, not your actual account.
As a result, the recovery process is much easier. If your information gets compromised in a breach, you don’t have to close your primary credit card account, remove your personal information from certain sites, and update your payment information with multiple vendors. You can just cancel your masked credit card and get a new one.
Plus, depending on the particular masked card you have, you may be able to use it as a tool for controlling your spending in addition to gaining privacy. Certain masked credit card providers let you set a maximum spending limit on your card. Once you reach your spending limit, your masked credit card will no longer work.
What are the downsides of using a masked credit card?
Masked credit cards are excellent privacy protection tools, but they can come with complications.
Making returns or exchanges, for example, isn’t always straightforward with a masked card. An online merchant may not be able to refund your masked credit card if it has expired. Or, if you try to return an item to a store after ordering online, the retailer may need to see the card you used in order to refund you. Masked credit cards are also not the best payment solution for situations where you have to verify your identity. Think: arriving at a hotel after making reservations online with your masked credit card.
Something else to consider is that you may not be able to earn points with a masked credit card. If you use a masked card provider instead of going through your bank, then the service provider acts as the merchant. That means if you pay for gas using your masked credit card, the credit card company will be listed as the merchant instead of the gas station. This can limit your ability to earn cash back rewards or other types of points for your spending.
Many masked credit cards also have shorter expiration dates, which means they don’t work well for subscriptions and recurring payments. Plus, using a masked card may also take longer. Certain masked credit card providers require you to log into a separate portal each time you use your card, rather than saving the card number on your browser. This extra step may only add one or two minutes to your transaction process, but it can detract from the convenience of paying online.
How do I know if a masked credit card is right for me?
Before you decide whether or not to apply for a masked credit card, think about your online payment habits. What percentage of purchases do you make online versus in person? Do you pay your utility and medical bills online? Do you typically buy from new online retailers, or stick to familiar vendors?
Next, consider how much of your personal information has been compromised in the past, and by whom. If you’ve had to cancel multiple credit cards due to fraud attempts or a breach, you may find that using a masked credit card gives you a greater sense of comfort when paying online.
In any case, taking the time to reflect on your habits, lifestyle, and privacy needs can give you a better idea of how beneficial a masked credit card would be for you. You should consider signing up for a masked credit card if:
Your information has been compromised in a breach.
You’ve had to cancel multiple credit cards due to fraud attempts.
You shop online frequently.
You pay all or the majority of your bills online.
You occasionally make online purchases from smaller, less established merchants.
You want more privacy and protection over your financial information.
You want to eliminate the hassle of closing your main credit card account after a breach.
Securing your online privacy
In the digital world, privacy over your personal information isn’t guaranteed, which is why it’s important to seek out smarter privacy solutions. Masked credit cards can offer you improved protection, as can other privacy tools. FigLeaf, an all-in-one privacy app, gives you more control over your online experience by offering you privacy when and where you want it.