With all the online purchases we make nowadays,
protecting your financial data is one of the best and easiest ways that you can
secure your bank accounts and credit cards from fraud or theft. And thankfully,
it's not that hard. I've talked about virtual credit cards in the past,
and after a lot of research and personal trialing of the software,
I'd like to share with you the best options you can use to mask your financial
transactions and listen closely because there are some very important
distinctions between these services that have a huge impact on how you might use
them. My name's Josh.
This is all things secured and in this video I'm going to walk through the best
virtual payment option and then answer the most common questions I receive about
this stuff. And before we even get started here,
I want to address the elephant in the room. It's an acronym known as "KYC".
KYC or Know Your Customer is a mandatory process that banking entities are
required to go through to identify and then verify their customers. Basically,
this means that if you're applying for any kind of banking or financial service,
like say a credit card, they're going to require you to share your real name,
a working phone number and address,
and even an ID number like your social security number.
The virtual card options that I'm going to share with you here fall into one of
three categories, all of which require a different level of trust. First,
there are those that act more like a bank and are bound by these KYC rules,
which some people find uncomfortable.
And then there are those that require you to trust them to connect directly to
your bank account,
which can also make some people uneasy and I understand that. And finally,
there are those that you just trust with your credit card number to top up the
prepaid card, whichever you choose.
Just recognize that the purpose of doing this is to minimize your risk profile
by not giving out your actual credit card to any online,
website or store that asks for it, and that's a good thing. Okay, let's dive in.
Privacy.com is one of the most well known virtual credit card options
available, and one of the great things about it is that it is free.
There's an integration with 1Password and they do give you a high level control
over the cards. You can create one-time cards, spending limit cards,
monthly spending limit cards, all of those things.
One of the reasons why I've really enjoyed it,
and they do have an upgraded premium option that gives you more virtual cards,
but I think even the 10 that they give you per month on the free level is more
than enough. The things that I haven't really liked about it is that you can't
use these cards on a mobile wallet like Apple Pay.
It's also restricted to US residents as many of these options are.
And here's what most people don't like, you know that I talk with.
They don't like that they have to link their debit card or their bank account
with privacy and the implications that that has with trusting privacy
with that connection to your bank.
Klutch is the newest kid on the virtual credit card block,
but I've really enjoyed using their service.
They offer unlimited virtual cards with lots of control over how those cards are
used.
Even being able to create cards for your wife or for your children that you can
limit the spending or at least monitor the spending on these cards are actually
virtual credit cards and not debit cards connected to your bank,
which can be a good and a bad thing. I'll explain that in a second.
One of the good things is that you can get up to 6% cash back when you're using
these cards, and again,
it's free to use. It's being paid for by all of the credit card fees that happen
when you make purchases. The downside to all of this, of course,
is that you are subject to KYC and it's only for US residents,
and the reason for this is because you're actually applying for a credit card
through Klutch,
and then they're giving you access to these virtual cards on the backside
through their app and through the online portal.
IronVest is a service that I've just started testing out a lot this past month.
It used to be known as Blurb by Abine,
but it's been spun off into its own company and it's very similar to Klutch.
The biggest difference is that instead of being an actual virtual credit card,
IronVest makes it a prepaid debit card. There are pros and cons. Obviously,
the pros are that you're not subject to those KYC. You don't have to verify your
identity and do all of that stuff, but of course,
the cons are that it's prepaid. You can't just use the card.
You have to top up the card and you have to trust IronVest with your credit card
or debit card data to top it up.
Another con is the limited control that you have.
You can only create these one time cards, at least right now.
They don't offer these monthly spend limit cards,
and there are fees to load these prepaid cards,
so every time that you want to create a new card, you have to pay a small fee,
and then anything over a hundred dollars, you have to pay a percentage as a fee.
And finally, this is still US residents only. Okay,
enough of the US residents only. Let's jump into Revolut,
which is open to Australia, Japan,
and EU countries as well as United States residents. That's the benefit there.
You can use these virtual credit cards if you're a resident of other countries,
and it works very similar in terms of the flexibility to be able to create a lot
of these cards and control their spending limits.
The cons here are that you are subject to KYC rules.
They're going to ask for a lot of your personal information,
and it requires a connection to your debit card or bank account.
So at least to my knowledge,
you can't just use your credit card to fund this stuff.
You have to give them access to your debit card or your bank account. Now,
if you're one of those people that has invested in cryptocurrency,
you might find this next option Moon to be of interest to you.
It's an easier way to use your crypto for daily purchases. Stuff like Bitcoin,
Litecoin, Ether, or Zcash. It's free to use,
but you're taking and basically converting your cryptocurrency at the current
rate of your purchase in order to top up a prepaid card.
It's really a one-time use card.
You're not really creating a virtual card that you can use over and over again.
You don't have control over spending limits, all that stuff.
It's basically just a prepaid crypto card and again,
only for US residents.
Sometimes the best option is the one that is the easiest to use,
where you don't have to download a new app or sign up for something new,
and that's where Apple Pay and PayPal come into play. These are widely accepted.
You can use your current credit card and really it's great for in-person
purchases when you're doing something,
let's say using like your Apple Pay credit card to make a purchase at Starbucks.
Thing is when you put your actual credit card on Apple Pay and you tap it to
make that payment. Apple does not give your actual credit card to the merchant.
It's giving them a masked credit card so that they can verify and send a
token that says this is an okay payment,
but they can't store your actual credit card, so again,
you're still cloaking your credit card number.
Now there's really no ability to create additional virtual cards,
and you don't have control over how these virtual cards are used in terms of
spending limits,
but it is an option if you don't want to try to sign up for something completely
new. Now, the final option is the absolute easiest,
and that is to check whether or not your current brick and mortar bank offer
virtual credit card options. Now, it's not going to be robust options,
but it is going to be free and there isn't going to be need for additional KYC
requirements because your bank already knows you. The cons here are that one,
not many banks are offering this, and two, the ones that do,
it's really not a very great option. The control on the spending limits isn't
great, and the number of cards that you can create is somewhat limited,
so you'll have to see what they offer and see if it's something that you want to
try to use or use one of these other options instead. Those are your options.
Now,
let me answer some of the questions that I often get about using these kind of
virtual credit card services.
Do opening these kinds of accounts hurt your credit score?
And the answer is that in most cases,
there is no credit pool because a lot of these are actually debit or prepaid
cards. The exception here would be Klutch,
one of the only actual virtual credit cards on this list,
which only pulls your credit after you've been approved.
I also get asked if this affects your points or miles programs with your credit
card, and the answer again,
depends on the service. If you're adding your credit card to Apple Pay for
purchases, then yes, you're still going to get the miles of points,
but if you're topping up a prepaid card with your bank account or debit card,
then no, obviously you won't. What about returns?
This is a very common question with thankfully a very easy answer.
Every service that allows you to quickly turn off or delete a virtual credit
card always allows you to continue to accept returns on that card even after
it's been turned off. In other words,
if you bought some shoes on Amazon using your virtual credit card and then close
that card down,
you can still return those shoes and get a refund issued to that same card
number. Money can be returned on a closed virtual card,
but it can no longer be charged. Finally, is this even safe?
And for liability reasons, I can't just say yes,
there's always risk involved in using these type of services no matter what you
do. The reason I like this option is, and I've already said this before,
my actual credit card number is no longer being stored on company servers all
around the world for every shop that I make purchases with. Earlier this year,
I noticed some bogus charges on my credit card that forced me to immediately
cancel that card, and I don't know who stole that I number,
but now that it was stolen, it was no longer good.
The problem is that it took a couple weeks to get a new credit card in my hands.
Not only was that inconvenient,
I also didn't enjoy the time I had to spend getting those bogus charges
reversed. Do you have other questions I haven't answered here?
We'll leave them in the comments below. I'll do my best to answer what I can.
I have links to all of the service that I've mentioned in the description below,
and if you'd like to see how to set up and use a virtual card,
you can watch this video next.