It sometimes seems as if nearly everything these days is disposable, and apparently so are some credit cards! Disposable credit cards —also known as “throw away” credit cards—have actually been around since the early 2000’s so they’ve had time to work through the system to see if they have any tangible advantages. And the reviews are mixed.
Some large credit card lenders, such as Bank of America and Citibank still issue them, and so does PayPal. But American Express ended their participation a few years ago. Disposable credit cards have never taken off as expected.
To obtain a disposable credit card you go through the website of a participating lender where you create a one time use credit card number, set the credit limit and establish a time frame. Some of the cards can be reloaded for new activity and some are truly single use cards—you use them once then throw them away. Often, they can only be used for a single merchant.
The advantages of throw away credit cards
One of the biggest advantages is that you can transact business without ever giving out your regular credit card information—the ones on which a thief can run charges right up to your credit limit. By shopping with a disposable credit card, you can buy from merchants you’ve never worked with in the past, and especially online vendors, without risking the theft of your regular credit card information.
You can use the cards once or just a few times, then dispose of the card with no further risk of liability. Your credit card numbers—or at least those of the real ones—won’t be given and thus won’t be stored in a merchant’s database where they could be compromised.
Throw away credit cards can also be an advantage for traveling. Travel involves a higher likelihood of identity theft since a) you’re in unfamiliar surroundings, and b) you might let your guard down, especially if traveling for pleasure. With disposable cards, the risk of losing the card or of identity theft will be lower since the cards are for limited use. This saves you the trouble of having to clean up all that mess and then needing to switch credit cards and let all your merchants know about the change. What a waste of time.
Why consumers are reluctant to use throw away cards
Since most major credit cards provide buyer protection, the risk of losing a regular credit card is low to begin with. In addition, credit card issuers regularly monitor credit card use by their customers and have become experts at identifying unusual transactions or activity. For this reason, the security benefit of throw away cards just doesn’t seem as important or useful.
Throw away credit cards seemed like a better concept in the early 2000s when shopping online was less common, more exotic and seen as higher risk. Disposable credit cards limited the potential loss while protecting your permanent credit information. But now that people have become more comfortable shopping online, and it’s become so common, the need to address these concerns has largely faded.
Replenishment is another issue. With disposable credit cards, either you have to reload them, or get a new card. With regular credit cards you’re free to spend up to your predetermined credit limit, and that provides greater flexibility.
In the final analysis, disposable credit cards are probably no better than purchasing Visa or Mastercard gift cards at a local retailer. They’re easier to obtain, and you can generally reload them online as well.
Cherleen @ My Personal Finance Journey says
Although my credit cards offer buyer protection, we use disposable credit card for online purchases and travel. It is also one of our ways to spend only what we have and not maximize our regular credit card.
Hi Cherleen–The use of disposable credit cards as a budgeting tool is the underappreciated side of the cards. But it’s true, you can only spend what you’ve pre-authorized. That’s an excellent way to force yourself to stay within budget while traveling, and that’s one of the hardest budgeting situations possible. When you’re traveling you’re feeling good and the defenses are down and the money is flowing!
Excellent point, thanks!
I use this all the time with online purchases through Citi; and also if I purchase something by phone I can be provided a virtual credit card number which to me is the same as disposables. Local stores – no.
Neal Frankle says
Are these numbers easy to obtain from Citi? Does the data automatically flow to your main card so you can download info easily?
As long as I have protection through my credit card I wouldn’t use this. I do see how it could be beneficial with debit cards though and the protections don’t seem as good with them.
Hi Jerry, I agree with you and I think that’s the real reason why they haven’t caught on. These day’s if it isn’t easy it won’t survive. Still, I think the cards have real use when it comes to dealing with an online business you’ve never dealt with (there ARE sites that exist just to harvest financial information) or for overseas travel. Might also be a good idea for kids traveling or away at college.