Startups capitalizing on consumers’ annoyance with data breaches are offering new payment tools that promise to aggressively shield cardholders’ privacy. But in exchange for peace of mind, you may be giving up card rewards and other useful perks.
Before you decide to jump ship for a more secure payment method, look carefully at the card’s terms and benefits and consider whether they’re worth giving up for more security.
For example, the new Final credit card beefs up card security by giving each merchant a different credit card number, so hackers who obtain the numbers can never reuse them. That’s a welcome change for consumers who are fed up with getting a new card number each time a merchant’s payment systems are breached. Final also allows consumers to delete the numbers so merchants can’t repeatedly charge a consumer’s card for ongoing services, such as a canceled subscription.
But in exchange for the added security and convenience, Final users will have to give up the opportunity to earn substantial rewards on their purchases. Currently, Final card users earn 1 percent cash back on purchases, which is below what many cash back cards offer, according to our Cash Back Cards Survey. Other rewards cards offer substantial bonuses on airline purchases or hotel bookings, which are often booked and paid for online.
In addition, Final users could wind up paying more to carry a balance, depending on the cardholder’s credit history. The Final card offers everyone who qualifies for the card a single APR of 18.75 percent. That’s not bad for a privacy-focused millennial with a shorter credit history.
Final’s one-size-fits-all APR, though, is high, compared to CreditCards.com’s weekly rate survey, in which the average card APR is 16.06 percent. Interest rates for cardholders with the best scores often are even lower.
The Final card’s benefits are also slightly more limited than what’s offered by traditional credit cards. For example, Final offers a number of standard card perks, including dispute resolution and car rental insurance.
According to Alex Cramer, Final’s head of cards, Final also offers additional benefits through Visa Signature, such as purchase security, return protection and extended warranty.
“We like to think that with Visa’s network offerings and our custom product funcionality, we offer one of the most feature-rich and consumer security/control-oriented products available,” Cramer said in an email.
Final, though, doesn’t offer a popular money-saving benefit called price protection, which can help you lower the price of your online orders (if you remember to use it). Many cards, by contrast, allow you to request a partial refund if you score an item for a lower price.
Similarly, Privacy.com offers virtual prepaid debit cards you can use to make online and mobile purchases without giving away your private details.
Privacy, in addition to allowing you to use new virtual cards for every merchant (including automatically deleted ‘burner cards’ at merchants you don’t trust), also lets you use fake billing details in order to further safeguard your privacy. That’s a big plus for privacy-conscious consumers who are not only concerned about hackers getting access to their personal details, but are also alarmed by businesses collecting information about their purchases.
However, because the virtual cards Privacy uses are prepaid Visa cards, the privacy payment app offers substantially fewer benefits than most credit cards, including Final.
For example, Privacy offers zero liability for unauthorized transactions above $50, a spokesman confirms, and dispute resolution if you find a billing error on your statement. But like most debit and prepaid cards, Privacy doesn’t offer card rewards or other special card benefits, leading to missed opportunities if you regularly use your card online.
Your bottom line: If you’re thinking about switching to a new privacy-focused payment card, think seriously about the benefits and trade-offs. If you’re concerned about online privacy or identity theft or care more about convenience than rewards, a privacy-focused credit card such as Final could be a good option. But if you want to get the most out of your spending, you’ll get more benefit from traditional cards.
See related: Purchase protection survey 2016: Which cards offer them?, How card travel insurance can save you