A credit card is a payment tool funded by a bank. Customers use the bank's money to make transactions, which they will pay back later.

People's responses to credit cards can be divided into two camps. Some enjoy using them, while others fear that credit cards will lead to overspending.

Credit cards can be advantageous when in the right hands. Conversely, they can be detrimental when misused. However, when used correctly, credit cards offer many benefits.

Benefits of Credit Cards

When used wisely, credit cards provide various advantages. They facilitate online shopping from international sites and can be used to purchase plane tickets or book hotels.

Additionally, credit cards are useful for international transactions and cash withdrawals abroad without needing to exchange currency beforehand. For instance, while on vacation in Dubai, you can use your credit card to buy souvenirs.

Credit cards can also serve as emergency funds if you don't have a specific savings account, such as for unexpected medical expenses. They often come with beneficial promotions like discounts, zero-percent installments, and cashback.

These benefits also help build a credit history, which is important for applying for loans in the future. With additional protection from card issuers and stores, you can feel more secure during transactions, especially online.

Read: List of Interbank Transfer Fees and Benefits of BI Fast Transfers

Virtual Credit Card

Just from its name, you can already get an idea of what a virtual credit card is. Translated into Indonesian, "virtual credit card" is "kartu kredit virtual."

This means a virtual credit card is a non-cash online payment tool that doesn't involve a physical card. Unlike traditional credit cards, which require a card for transactions, VCCs do not need a card for transactions.

However, you will still receive a 16-digit VCC number, a name, an expiration date, and a 3-digit CVV. This way, you can use the VCC for online transactions worldwide. Essentially, its function and usage are the same as a regular credit card, except for offline transactions, where you need a physical card.

Furthermore, while a regular credit card is funded by a bank, a VCC's funds are drawn from a balance that you must top up first. As long as you're registered as a customer with the service-providing bank, you can have a VCC without needing a regular credit card.

Advantages of Virtual Credit Cards

• Protects your primary credit card from online fraud since you can transact without using the main credit card's data.
• More practical for international online shopping.
• Safer because you don’t need to input personal data to merchants during online transactions.
• More economical since you can limit the use of your primary credit card, and the CVV has a relatively small limit.
• You can access promotions available only for credit card users.

Read: 5 Important Things to Consider Before Withdrawing Cash from a Credit Card

Virtual Credit Card vs Regular Credit Card

Both virtual credit cards and traditional credit cards have their own advantages and uses. Here’s a comparison: 

Virtual Credit Card

1. Security  

Virtual credit cards are designed to enhance online security. They generate a temporary card number for online transactions, reducing the risk of your main credit card number being stolen or misused.

2. Temporary Use 

This card is ideal for one-time or short-term transactions. You can set an expiration date or limits on the virtual card, helping you manage and monitor expenses.

3. Convenience 

Virtual credit cards are typically used for online purchases and subscriptions. Since this card is not physical, it won't be used for in-person transactions.

4. Easy Management 

You can create and manage virtual cards through the credit card issuer's online platform or app, making it easy to track and control spending.

5. No Physical Card  

There is no physical card to carry or replace if lost, which also means you can’t use it for transactions requiring a physical card.

Regular Credit Card

1. Widespread Acceptance

Traditional credit cards are accepted at various locations, both online and in physical stores. They are also necessary for transactions that require a physical card, like in-store retailers or specific reservations.

2. Rewards and Benefits

Many traditional credit cards offer rewards, cashback, travel benefits, and other perks that can be advantageous for frequent users.

3. Physical Presence  

These cards are tangible and can be used for various transactions, including in-person purchases and ATM withdrawals.

4. Building Credit

Using traditional credit cards responsibly helps build and maintain a credit history and score, which can be crucial for future financial activities, such as applying for loans or mortgages.

5. Risk of Loss or Theft 

There is a risk of physical loss or theft, and if your card is lost or stolen, it can be misused until you report it.

Both types of cards offer unique benefits and can be used together to maximize transaction security and convenience.

You can also use the neobank app from Bank Neo Commerce as a payment tool funded by your own account. Download the neobank app on PlayStore and App Store now!

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PT Bank Neo Commerce Tbk is licensed and supervised by the Indonesia Financial Service Authority (OJK) and an insured member of Deposit Insurance Corporation (LPS).