Virtual credit cards defend against fraud and keep 'free trials' free

Ethan Wolff-Mann
Senior Writer
FILE PHOTO: A Mastercard logo is seen on a credit card in this picture illustration August 30, 2017. REUTERS/Thomas White/Illustration/File Photo

The economics around free trials is not a secret. Companies hope that customers who plan to cancel after that 30-day Hulu, LinkedIn or Amazon Prime trial ends forget, and stay on as subscribers.

Some people, probably the ones who don’t hit snooze on their alarm clock, can handle this with discipline. But others simply forget they had signed up for a free trial and end up with months of charges on the credit card they gave, because they failed to cancel in time.

There is one interesting solution that most people don’t know about: virtual account numbers that you can get from your bank.

Banks like Citibank, Bank of America, and others — Doctor of Credit has a great list — allow customers to generate virtual credit card numbers that are linked to a real credit card account, but expire in a short time, say, a month. So while they are legitimate and can be used for a short time, nothing can be charged through them after a certain time. This makes them very useful for free trials.

They also can be used for other things like budgeting, since they can be set to a specific dollar value, even though they’re not prepaid. (They just turn off.)

Another option that works if you’re not a customer of those banks is Privacy.com, which lets you create virtual cards in a similar fashion. With this service, you can link your credit card to new virtual credit card numbers. Each one can have different limits, either cutting off free trials or making sure extra fees aren’t added to something you have agreed to pay for. You can also pause spending as well.

So if you have a Spotify subscription but wanted to make sure that Spotify would only charge you a certain amount — cutting off potential price hikes — you could restrict your card to a dollar limit.

Ethan Wolff-Mann is a writer at Yahoo Finance focusing on consumer issues, retail, personal finance, and more. Follow him on Twitter @ewolffmann.

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