If you’ve been researching credit card issues or have been trying to find the best credit cards available, you’ve probably come across the term “credit card number generators”.  You may wonder what they are and their potential uses.  Let’s look at a few meanings and applications.

First, and most nefariously, there are generators designed to cycle through special numerical sequences in hopes of stumbling upon an actual, useable credit card number.  These tools are often used by those who are engaged in credit card fraud.  As you’d undoubtedly guess, making a purchase with a generated account number is illegal.  It’s nothing more than a way to steal from the credit card company, the vendor and (in cases where the person who rightfully owns the account remains unaware) the actual cardholder.

There are valid uses for these tools, but they aren’t very common.  For instance, a software designer may need a sequence of seemingly valid credit card numbers in order to test an ecommerce application.  In these situations, no one is actually making a purchase with the card and the “dummy” information is only there to test the program in an offline situation.

These number generators are usually designed based on a MOD 10 algorithm, which is also referred to as the “Luhn” formula.  It’s a fairly basic way of testing whether a series of numbers “fits” with the way real credit card numbers are actually designed.  In legitimate situations, MOD 10 can recognize phony card numbers.  If you’ve ever accidentally entered your card number incorrectly on a website to make a purchase, a Luhn Formula tool is probably what allowed the vendor to immediately recognize the error and to ask you to re-input the information.

Unfortunately, most of those who use this type of credit card number generator aren’t developing new software applications or trying to help consumers to make a purchase.  They’re using other people’s accounts to make purchases online or via telephone.  For this reason, many people have advocated outlawing the generators themselves, as they are primarily a tool for crime.

Second, the term can be used to apply to a more legitimate use–one that actually works in favor of consumers.  Many people are worried about protecting their personal and credit card information from the prying eyes of those who would use it illegally.  In response to that admittedly valid concern, some credit card issuers are allowing their customers to create random credit card numbers for the purpose of making online purchases.  CitiBank, for instance, allows consumers to generate alternate account numbers for this very reason.

This strategy creates a “one time use” account number, keeping the actual card number away from others and better protecting the account holder from unauthorized charges and uses.  Although some people have concerns about the contractual terms associated with CitiBank’s method, almost all agree that this added level of protection does have some real value to cardholders in terms of account protection.

Credit cards are becoming the backbone of commerce.  The rise of online and telephone purchasing, combined with their convenience, has greatly reduced personal check use and is moving us away from a cash-based world.  Almost everyone relies upon at least one credit card in their daily life.  The best credit cards simply make life easier.

With such tremendous growth comes equally tremendous opportunities for criminals to exploit the system.  Credit card number generators are a perfect example of this ongoing challenge.  While many use the tools to steal, the credit card companies are using similarly-named technology in an attempt to thwart the wrongful use of credit card numbers.