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Sharing your credit card details online can feel like a shot in the dark. With all the recent data breaches, you’re just hoping your data won’t end up in the hands of a criminal, but there’s no way to be sure.
Virtual cards help you stay safe in a world where credit card fraud is common: The Federal Trade Commission received over 101,000 credit card fraud reports in Q1 of 2024 alone.
Let’s discuss how virtual cards protect you against credit card fraud and how to use one.
Virtual cards are temporary digital cards designed specifically for online transactions. You can generate a virtual or “masked” card electronically and use it just like you'd use your regular credit card when making payments online.
Details of your real credit card remain hidden, which protects you against fraud and data breaches.
Masked cards, or virtual cards, work pretty much the same way as your regular credit or debit card when making the payment. However, they offer an added layer of security. Here’s how:
Masked cards come with a unique number. None of your personal information is attached to this unique number. Even if an adversary manages to get their hands on your virtual card number, they can’t extract any meaningful information from it. However, it’s important to choose a trustworthy virtual card issuer, because you’ll need to share your real credit card information with that company.
You can add spending limits to a virtual card to ensure it’s only used for the intended purposes. For example, you can create a virtual card for your quarterly shopping spree and reload it each quarter. In a worst-case scenario, if your virtual card information is somehow stolen, your loss is likely to be limited.
Limits are also helpful when you need to give the card to your employee to make a business purchase within a stipulated price.
You can discard the virtual card once you’ve used it. Each time you want to make an online payment, you can create a new and unique virtual card so you never have to share your real card information online.
You can even create multi-use cards. If you want to offer a card to your employees to buy some items for your new office, give them a multi-use card and then discard it once they’re done shopping.
A virtual card offers a slew of benefits. Let’s discuss some key benefits.
Almost 40% of Americans are worried about people stealing their identity or personal information and 42% are worried about companies selling their information.
Of course, nobody wants to share their credit card number with a hacker. But if there’s one thing history teaches us, it’s that even the most secure systems can experience a data breach—in fact, even Microsoft recently experienced a data breach.
Virtual cards address this problem of data breaches at the source. Since you’re never required to share your true credit card information, there are zero chances of a hacker getting their hands on it.
Plus, you can often set store and amount limits. That way, if a threat actor somehow accesses your virtual card, they would only be able to use it at the store it’s linked to for a certain amount.
Some hackers aren’t after money because stealing money gets them attention. Instead, they steal your identity and find ways to steal small amounts of money from hundreds of other people just like you.
If a website where you recently used your card experiences a breach, the hacker might have all the information necessary to steal your identity. Virtual cards are a great way to prevent this. None of your personal information is linked to your virtual card.
This means there’s no way for a hacker to find your name, address, or phone number via a virtual card.
You can set an expiration date for your virtual card to stop recurring payments for unwanted subscriptions automatically.
For example, if you’ve subscribed to a magazine using a virtual card that expires in six months, you don’t need to take action at the end of six months. The card expires and the magazine company can’t charge you for the next cycle.
If you want to continue your subscription, you can always create a new virtual card with a new expiration date.
Generating a virtual card only takes seconds. You don’t need to wait for the credit card company to ship the card to you, grab the physical card whenever you need to make a payment or reserve a spot for a physical card in your wallet.
It’s also easy to set limits and deactivate your virtual card with a few clicks. All you need is one app on your phone to manage all aspects of your virtual card.
Why pay an annual fee for a credit card when you can get as many cards as you want for no extra cost? Once your Cloaked account is active, there’s no need to pay an annual fee for multiple cards—create and discard as many cards as you want for free.
Virtual cards are a versatile tool that helps improve security and offers convenience in a wide range of situations. Here are some common use cases for virtual cards:
Using your payment information on websites you’re unfamiliar with or that seem to lack strong security measures can make you feel uncomfortable, and it should.
Websites with poor security measures are common targets for stealing personal data. In fact, that’s how many people fall victim to brushing scams.
Using a virtual card to make online payments ensures your real credit card information never makes it to the internet.
Want to sign up for a software trial? Don’t share personal information. Use a platform like Cloaked to create a unique identity and a virtual card with a limited balance or short expiration date.
This ensures you never have to deal with spam email and prevents an unnecessary charge on your card if you forget to cancel the trial.
You can create separate virtual cards for recurring payments like utility bills and gym memberships to track each payment category separately.
Using different cards also makes canceling any one recurring payment easier without impacting other payments. For example, if you want to discontinue your gym membership, just cancel the card you use for the gym.
Worried about overspending on entertainment and shopping? Create a separate virtual card for all categories—eating out, buying accessories, and watching movies—and add spending limits.
This way, you’ll know you’re about to overspend before it happens. If you decide to spend anyway, you can always increase the card’s limit.
Getting your first virtual card is fairly simple with Cloaked. Here’s an easy, four-step guide to creating your first virtual card:
Join Cloaked and set up your profile. Start by creating a unique identity—your identity includes a new email and a second phone number. You can use this “Cloaked” identity alongside your credit card information when signing up for trials, subscriptions, or shopping.
Download the Cloaked app and log into your account. Navigate to Cloaked Pay and follow the prompts to create a virtual card.
Cloaked lets you fund each identity separately, so you can lock your card for the amount and location. For example, you can add $500 to your Shopify identity and $1,000 to your Airbnb identity.
This ensures there’s always a limited amount available on your card—but you can always add more money when needed.
Once you’re done creating masked cards, you can make your first payment. You can change spending limits or deactivate virtual cards whenever you need them through Cloaked.
The exact steps to add a virtual card to your digital wallet depend on the digital wallet you use.
As an example, here’s how you’d add your virtual card to Google Pay or Apple Pay:
Yes, you can lock or cancel your virtual cards at any time. However, the exact process to lock and cancel virtual cards differs among card issuers.
Yes, you can dispute charges on masked cards. The process is similar to disputing charges on real credit and debit cards. You call the card issuer, inform them about the issue, and submit the necessary documents, such as receipts or communication records. The key is to act quickly and maintain communication records until the issue is resolved.
It only takes a few seconds to make a new virtual card with Cloaked for existing users. If you don’t have a Cloaked account, join Cloaked—it only takes a few minutes—and create your new virtual card.
Virtual cards are more secure and offer better privacy than traditional physical cards. Cloaked makes it easy to create, manage, and destroy virtual cards, but there’s a lot more you can do with Cloaked to protect your privacy.
Cloaked offers a range of features, including a password manager, secure storage for confidential information, and the ability to cloak your identities with one click. If you want to protect your personal data, join Cloaked and say goodbye to spam emails, data breaches, and fraud.
