Similar to a burner phone or "throwaway" social media account, burner credit cards are temporary, virtual credit cards that are not your "main" credit card. The bank or burner card app will give you a temporary number that links back to your main credit card which you can use for online purchases.
Instances of using stolen credit cards to buy goods jumped 34% from 2017 to 2018, and eCommerce experts expect this number to rise as online purchases continue to increase in number. With almost 148 million people affected by the Experian data breach, among other notable breaches like Target, credit card fraud, and identity theft will only continue to be a concern. This is especially salient given that many people rely on auto-fill functions and virtual wallets like Apple Pay so they don't have to re-enter their credit card information repeatedly, but it also makes the cardholder susceptible to identity theft and eCommerce fraud.
With more awareness of how vulnerable our personal identity information is, staying safe online has caused the demand for burner credit cards to increase.
How Can I Get a Burner Credit Card?
Some banks and credit card companies offer "burner" cards in the form of one-time codes that can be used in online checkout where your billing information is the same, but you get a randomly-generated card number.
There are also burner credit card generators such as Privacy.com or Token where you create an account and link your bank account or credit card. You don't need to pre-load any funds or make a purchase. (Avoid any site or app requesting pre-loading of funds to generate numbers for one-time use.) Upon downloading the appropriate browser extensions after linking your card, you can get a burner credit card number to use on any shopping site.
You can use just one burner card number for various merchants, or make one for each merchant you buy from.
Pros of using a Burner Credit Card
Let's take a look at the advantages of using a burner credit card.
Protection from Identity Theft
You are far less susceptible to identity theft because most of the major burner credit card apps like Privacy require two-factor authentification in order for charges to be completed.
Easier to track where your information was compromised
In the event that your information is still compromised if you create a burner credit card for each individual merchant that you shop with it can become easier to determine when or where your information was compromised. While it doesn't always catch a cybercriminal in the act, it allows both you and the merchant to take extra precautions once you've retraced your steps.
Safer to use on public Wifi networks
While you should always take precautions using public Wi-Fi like the kind found in hotels, coffee shops, and so on, if you really need to make a purchase and it can't wait until you're back on a private network, you can use a one-time burner credit card for that purchase. This makes a burner credit card app more reliable than standard e-commerce processing.
Limits the risk of your credit card being disabled
If you are making a purchase in another country that tends to get flagged for fraud, such as Cyprus and the Philippines, even though it's a legitimate purchase, a burner card number won't get your entire card shut down where you're forced to call the credit card issuer to be able to use your card again. If you'd also like to support a small business that might not have the most secure or robust-looking eCommerce setup, a burner card number could be the way to go if they don't use a payment processor you're familiar with.
A burner card can help keep track of expenses
If you use an app where you designate a burner card number for a specific merchant or membership, it can help you keep track of your spending without having to manually scan your credit card statement every month. You only need to track certain burner card numbers to determine if you're sticking to your monthly budget or find the appropriate expenses you need for your tax return.
Allows you to set a limit on expenses
Privacy and some other burner credit card apps let you set monthly limits on each burner number you create, which can help you stay within your monthly budget more effectively than your credit card's regular limit or simply telling yourself or your household what their spending limit is.
No charges to your real card
For subscriptions where you'd like to give them a try but don't want to commit past the trial period, a burner credit card number makes it easy without having to be mindful of your actual card being charged. You can use a single-use card number then change it to your regular credit card, or a different burner number if you'd like to continue your subscription.
Cons of using a Burner Credit Card
Like most things, there are drawbacks to using this method too. Let's take a quick look.
Refunds can be more difficult
If you were erroneously charged for a purchase, or need to return an item, the refund process can be made more difficult if the credit card number was only meant to be used once and you no longer have it. Even though the linked credit card is the same, this can become very time-consuming if you need to constantly relay this information to the card issuer, burner app, and merchant and potentially wait weeks for your refund to process.
Still some risk to your credit card
Burner credit cards ultimately aren't failsafe and can't fully prevent the linked credit card from being compromised in breaches or physical theft and loss. If the linked credit card needs to be shut down due to fraud, you can only have a burner card number issued for cards and bank accounts that you registered to the burner app. You can't get a "loaner" burner card number to use while the compromised account is closed and you're waiting for a new bank or credit card to be sent to you.
Can be more difficult to authorize a transaction
Two-factor authentification provides an extra layer of protection that standard credit card processing does not, with most people opting for a code sent to their phone. However, there is always the risk of the transaction window timing out before the code arrives.
May mean more work for you
If your credit card gets turned off because of fraud or theft, or the information changes because the card expired, you will have to create all new burner card numbers all over again.
While burner credit card numbers can present some issues if you're making purchases where you might have to return items or dispute a transaction amount, they also present many benefits when it comes to securely making purchases online.
Some banks offer one-time use codes, but an ongoing burner credit card system through a system like Privacy or Token can even help you manage a household or small business budgets by placing limits on each burner number. Ultimately, burner credit card numbers can't prevent all theft and fraud but they can grant you peace of mind if you're using an unsecured connection or have experienced having your personal information compromised.