Virtual credit cards vs traditional credit cards: Which is right for you?

Credit cards have transformed the way we handle finances, offering convenience, rewards, and financial flexibility. Over time, credit card offerings have expanded to include both physical cards and virtual credit cards. Virtual credit cards, like those provided by IDFC FIRST Bank’s FIRST Wealth credit card, cater to the growing demand for secure and efficient digital transactions, while traditional credit cards remain indispensable for offline and all-round usability.

Virtual credit cards vs. traditional credit cards
 

Both virtual and traditional credit cards serve distinct purposes, with differences in key factors:

1. Security

Virtual credit cards are designed for secure online payments by generating temporary card details, reducing fraud risks. IDFC FIRST Bank’s credit cards like FIRST Millenia, FIRST Select, FIRST Wealth, and others allow instant virtual card creation for enhanced online safety. Traditional credit cards, while versatile, may be more prone to fraud if used on unsecured platforms.

2. Convenience

Virtual cards are ideal for online shopping and subscription services, while traditional cards remain essential for offline transactions, ATM withdrawals, and broader usage. For example, IDFC FIRST Bank’s FIRST Select credit card offers contactless features for easy in-store payments.

3. Control

Virtual credit cards allow users to set spending limits, which is also particularly useful for corporate expense management. Traditional cards typically don’t provide such customisations.

4. Efficiency

Virtual cards excel in single-use or subscription-based payments, while traditional cards remain more practical for offline spending. For example, IDFC FIRST Bank’s FIRST Millenia credit card offers rewards for daily offline and online spending.

5. Personal use

Virtual credit cards are best for online shopping and digital subscriptions, providing enhanced security. Virtual cards, such as those linked to IDFC FIRST Bank’s credit card offerings, offer one-time-use numbers that help avoid fraud and protect your main credit card details.

Alternatively, traditional credit cards are great for everyday expenses, travel, and offline transactions. Cards like FIRST Millennia offer benefits such as rewards on dining and shopping, making them ideal for personal use and larger purchases.

6. Corporate use

Virtual credit cards are excellent for managing business-related expenses, issuing cards to employees, and tracking spending with more control. Virtual credit cards help ensure employees’ expenses are within limits, and usage can be monitored in real time, making them a secure choice for business transactions.

Traditional credit cards are suitable for businesses that need higher transaction limits or make frequent offline purchases. The IDFC FIRST Bank FIRST Select Credit Card, for example, offers premium benefits like airport lounge access and concierge services, which can be advantageous for business travellers.

How do virtual credit cards work?
 

Virtual credit cards are linked to your existing credit card or bank account. When making a transaction, these cards generate a unique card number that you can use to perform online transactions just like a physical card. Virtual cards can be used for online shopping, subscriptions, or digital services. With IDFC FIRST Bank, you can easily access virtual credit card features through the bank’s digital banking platforms for added security and convenience.

With fully virtual credit cards like IDFC FIRST Bank’s FIRST EA₹N, you get exclusive benefits like enhanced cashback and discounts on various transactions. It is an FD-secured credit card which you can opt for despite having limited or no credit score. All you need is to open an FD with a minimum amount of ₹5,000 and apply for this card. Here are a few benefits you receive with this card:

• Enjoy 1% cashback on spends via the IDFC FIRST Bank app (₹500 cap per cycle) and 0.5% cashback on UPI spends via other apps, online transactions, utility bills, insurance, and wallets.
• Experience seamless UPI payments at 60+ million merchants.
• Get 100% cashback up to ₹500 on your first UPI transaction.
• Avail 25% off on movie tickets via District by Zomato.
• Enjoy an FD interest rate of 7.25% p.a., ₹25,000 lost card liability cover, and personal accident insurance worth ₹2,00,000.  

Virtual vs. physical credit cards: Pros and cons
 

• Virtual credit cards

Pros: Offers enhanced security with unique card numbers just like their physical counterpart, making them ideal for online transactions. It reduces the risk of fraud and identity theft, provides better control over spending, and is quick to issue for immediate use. They’re also a sustainable option as they do not require physical production.

Cons: Some merchants or service providers may not accept virtual cards, and users may face difficulties during emergencies when a physical card is necessary.

• Physical credit cards

Pros: Ideal for in-store purchases and emergencies. They’re widely accepted across all platforms, providing convenience during travel and offline spending.

Cons: Physical cards are more susceptible to theft or loss, and users may face fraud risks if the card details are compromised. Additionally, physical cards require maintenance and can incur fees for replacements.

Conclusion

Both virtual and traditional credit cards offer distinct advantages. Virtual cards provide enhanced security, control, and convenience, especially for online transactions, while traditional credit cards offer broader usage across physical stores. By understanding these unique features, you can make an informed decision to suit your spending habits and preferences.