I am an over-cautious internet user who very,very rarely types his credit card number into a web site.*
So I suddenly have an Einstein moment, and realize that there exist pre-paid credit cards…
You buy 'em for cash upfront , so if it gets misused, there’s not much damage to worry about. You can’t be a victim of identity theft if there’s no identity on the card.
This seems like it would solve my problem, and everybody else’s too.
So what’s the catch? What am I not seeing ?
Obviously, I can see that it isn’t a “real” credit card–because I’m not getting anything on credit, and paying in advance, too. But that’s a negligible issue. I’m talking about simple purchases totalling maybe a couple hundred bucks total per year. And if I want to buy something expensive, like international airline tickets, couldn’t I use a pre-paid card for that too?
(Yeah, I know the chances of the card’s number being stolen by the smiling waitress at the local bar is just as likely as some internet hacker. But I never said I was rational, just over-cautious. )
You’re not responsible for a credit card’s misuse in the event of fraud (as long as you report it, of course), so I don’t see why it would be a big deal to begin with. Like you said, the info can still be stolen all the same.
I’ve been using another solution. I got a card which lets you assign virtual numbers. I like the idea. The virtual number can be given a time limit, and optionally, a dollar limit. By default, the time limit is 30 days. The number will only be honored for the single payee who first bills against it. It’s billed against your regular credit card number though.
So, if I order from, say, Amazon, I bring up the app or web page which hands me a new number, and enter that into my Amazon order. The number will be set to expire in 30 days, and once Amazon bills against that number, nobody else can. In theory, if somebody compromises Amazon’s DB and gets the numbers, mine ain’t gonna do them much good. Allowing repeated payments to the first payee makes it reasonable for payees you’ve authorized to take out a monthly charge, although the maximum time limit I’m allowed to set is 1 year.
If many people got one of those, though, wouldn’t you start running low on numbers? There has to be many more possible credit card numbers than valid ones, so a person couldn’t buy things by just guessing a number at random, and some of the digits aren’t variable.
I’ve used the virtual numbers – they seem to work fine. Since they have an expiration date, they can be recycled with a new expiration date (which is required for any transaction) and a new code number (I forget the official name – it’s the number on the reverse side of a credit card used to confirm you have the card in your possession.
Note that if someone gets your credit card number, it’s credit card fraud but likely not identity theft. They can’t use the number to get additional cards, and the credit card company will remove any fraudulent charges. Wheras if they get your SSN, they can order as many cards as they want and wreck your credit before you realize it – especially since you won’t know the cards are being put onto your credit report until it’s too late.
The whole point of credit cards is that you can buy things you don’t already have the money for. Pre-paid cards destroy that.
If you want to use them for no more than a couple hundred dollars a year, then when not just use the cash instead of a pre-paid card as a middleman. Those cards have to have fees or nobody would issue them. So you get less out of them than you would for cash.
And if you want something on the Internet, PayPal and other pre-paid alternatives already exist. You’re adding another layer of complexity onto the system.
Identity theft rarely comes from stolen credit cards numbers in the first place. You need stolen social security numbers for that.
And credit cards are already limited to $50 for fraud, so any pre-paid card balance of over $50 puts you at greater risk.
I see nothing in favor of the idea and everything against it.
Yeah, I’ve idly wondered about that. It’s a 16 digit number, and I believe there’s a checksum in there someplace. The temporary cards the OP mentions burn through numbers, too, not to mention the explosion in the number of credit cards issued overall. It all depends on what fraction of those numbers are valid, which I don’t know. If they were all valid, that would be over 1.5 million numbers for each person on the planet, but I suspect the valid fraction is very small.
The code number on the back of your card is the CVC number, and they generate one of those along with each virtual number. However, not every online merchant asks for that, so it can’t be relied on to disambiguate anything.
I always have the money to buy the things that I buy with credit cards. In many cases, credit cards are far more convenient than cash, but I’m not foolish enough to carry a balance on any of my credit cards and pay ridiculous amounts of interest.
I agree with Canadjun. Once I hit a level of affluence where I could carry all my expenses and backed up all my credit cards with automatic pay, I no longer paid much attention to my balance (I exclusively use a Visa debit card, but keep several credit cards as insurance), and don’t glance at my account nearly as often as I should. I’d guess that a lot of people live their life this way.
A prepaid debit card with limits sounds like a great idea for sketchy purposes such as obscure overseas (or domestic for that matter) purchases or those friggen’ porno sites that have a cheap “intro” rate but will never cancel your credit card no matter how many times you call them. Not that I would know or anything. I’m going to look into one of those “limited” cards.
Some places like car rental companies and airlines will only take a credit card.
One thing I don’t get about the prepaid ones, how do they verify it’s actually yours? Your name isn’t really embossed into them like a real credit card. Isn’t signing the back enough? Can you even sign the back?
Actually, it’s going to depend upon where you get your pre-paid credit card. I recently got one, and it was issued to me, free from my credit union, with no fees on the card, unless I leave a balance on it for some unreasonable length of time. The ones you see at stores DO take a fee, but your bank may have ones you can get free of surcharges, and credit unions I think would be likely to offer one ‘free.’
Remember, the credit card company gets money from the merchant for allowing them to use their service, too. So, that’s where the profit for the issuing company is coming from, mostly. (And possibly some fee structure built on an annual basis with the credit union, but again - that’s not something that the end user like me is going to see.)
Probably not, and I think that’s the most useful aspect (in terms of online security) of these cards. It’s one of the most anonymous methods of paying online that I’ve run across. I used to use 'em for porn sites before I realized porn is just porn and overparanoia was probably unnecessary…
To many people, it isn’t really a “problem” to begin with. Many CC companies cover unauthorized charges (even the $50 liability of the past is often covered these days). Some cards offer virtual numbers. Paypal and Google Checkout can add another layer of privacy. Etc. Why bother with these?
I suspect the real issue is that most people simply don’t care that much about proper identity and/or fraud protection. Credit cards aren’t necessarily particularly safe, but they sure are convenient as hell and that’s probably why they’re so popular. Given a choice between security and convenience, some people just choose the latter.
How do you convince somebody to drive out to a grocery store, find a prepaid card, wait in line for the cashier, drive back, rip it out of the package, register it online (which they sometime make you do), type in the number, enter the expiration date and CVC2 code and then FINALLY check out… when they could simply 1-Click the item on Amazon instead?
The prepaid cards often have a small percentage fee above their printed value, too. A $50 prepaid card might cost $54 or such. I’m also not sure if they go up to the hundreds of dollars sometimes necessary for airline tickets.
But the main point is… they’re just not necessary unless you need increased anonymity. Yes, they CAN be used as a guard against identity theft or credit card fraud, but there are so many other ways to protect yourself that aren’t as inconvenient.
Convenience - CC’s make things easy, having to pre-buy them take that away and is a disincentive to cash.
With a CC not tied to the amount of current cash the carrier has available at the point of sale the CC holder is more likely to spend. Spending drives our debt based economy.
I did get a prepaid CC gift card, and one of the issues is how to get the card to zero balance. It was only a $20 card, so I used it for little things. Eventually lost track of how much remained. I tried to buy something for about $3, and it failed, later I tried it with a (about) $2.50 price, and it took it, so I figured the card had somewhere between $0 and $0.50 left and tossed it.
Going back to the question of credit card numbers, the modern US standard has effectively 14 useable digits. Oversimpliflying a bit, the first digit identifies the issuer if it’s a major issuer, e.g. Visa, and the the last digit is a simple checksum of the first 15. I’m not sure how the rest of the modern world’s CC’s relate to this standard. For more details see http://www.merriampark.com/anatomycc.htm .
So that leaves 14 digits for the actual account#. 14 digits gets us 99,999,999,999,999 which is ~10,000 numbers per human. Given that lots of humans don’t participate in the modern economy, running out of numbers overall is not an immediate concern.
But., as the reference above notes, numbers are issued in blocks to certain card issuing groups, and some of them may use up their allocation long before teh overall supply is exhausted. Just like the trouble we had giving away Class A IP addresses in the early days of the internet, or now have with giving away entire NPA-NXX blocks to alternate telcos.
Good reference. OK, the first six indicate the issuer, so minus the checksum digit, there’s 9 digits left for a single issuer of a Master Card or Visa - a billion numbers. I’m sure there’s combinations and blocks of numbers they won’t use - I know I’d find it a little weird if I got xxxx xx00 0000 000s for a number. An issuer that decides to implement virtual numbers is going to really inflate their requirements, nevertheless, if everybody uses the feature. I just counted - in a year and a few months I’ve generated about 30 numbers (I’m not sure, because their listing only shows actual transactions, and I think I wound up generating a couple that expired without being used). I’m sure there are people who will generate hundreds per year. Still, it sounds like they aren’t going to run into problems, even though you want most numbers unassigned so that randomly guessing a number isn’t likely to land on a legitimate one.
BTW, how come Discover’s block only reserves 100 issuers (99, I suppose if issuer 00 isn’t used)? Surely, they can be a bit more optimistic than that. Visa has a block of 100000.
BTW, on a more practical note - the card I’m using which provides this feature is a Citi Master Card. They provide a downloadable app, and a web page to access the number generator. Caveats:
1 - They advertise that the app can fill in card numbers automatically on many online retailer’s forms through a browser plugin. I never saw it work right, and gave up on it. You just have to copy the number.
2 - The downloadable app currently won’t run on Windows Vista.
3 - The web version is a real pain, navigation wise. To use it the way they want you to, you have to login twice, once on the Citi page itself, and once through the flash presentation which appears in a popup (with the same login info), so you have to let that through your popup blocker. It forces you through the legal disclosure enroute (every damned time), and you can’t seem to (legitimately) get around it. I’ve done some mild reverse engineering of their pages to provide myself with a direct route to their popup. It looks like the app which handles the number generation is actually provided by a third party, which is why it’s so kludgy to get to via their web page.
But Pre-paid cards are such a bad deal. Often they fix it so you can’t use the last few bucks. Or they expire, or have monthly fees.
In any case, stealing your CC won’t steal your Identity. They need Address, DoB, and SSN. All of which is easy to get on anyone. If anyone wants to steal your ID, they can.
I have used prepaid credit cards I received through my credit union and have no problems zeroing the balance on the cards. Each time the balance on the card has been deducted from the bill and and I paid the balance in another manner. My state and many others also have laws that ban expiration dates on such cards. Some issuers will charge a small dormancy fee if the card is not used within a specified time. The cards from my credit union charge $1.50 a month after one year till the balance is used up.
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