Mystery Behind The Credit Card Expiration Date

3 November, 2010

Ever wonder why your credit card has an expiration date on it as if it would go bad? Even more baffling is why do we get new cards several months before the old one even expires? The mystery behind the credit card expiration date is actually pretty simple but there are several reasons based on the particular credit card provider as to why our plastic has a lifespan.

One of the main reasons each credit card has a date of expiration is simply based on the prediction as to how long the magnetic strip on the back will last through regular use. Because we slide our cards in and out of wallets daily, the wear and tear on the strip eventually will cause malfunction when used in a card reading device.

Another common reason for the expiration date is for verification purposes. It can be easy for a con to access credit card information in some form but they would essentially need to have four main pieces of data before they can prove some form of ownership of the card. The expiration date is just one more layer of added protection.

Point of Contact

Because your credit cards typically expire in a three year period, it gives credit card companies an opportunity to touch base with customers on a regular basis. If you haven’t been using your card simply because you forgot about it, receiving a new card in the mail may trigger your memory and lead you to begin using the card again. If you have had the card for several years, it also gives the card issuer the opportunity to introduce you to the company’s new services and incentives. Because a new card is a welcomed piece of mail, the customer’s response is generally more positive. Marketing is largely the reason behind the new cards arriving well before the old card expires.

Customer Risk Factor Detection

In past years, the expiration date allowed credit card companies the opportunity to review customer accounts every 2-3 years. This helped credit card issuers cut their losses by not renewing the card accounts of ‘bad’ customers. Nowadays, credit card companies regularly check back in with credit records of customers to be more proactive about cutting their risks of account defaults instead of waiting the 2-3 year period for a recheck.

Check Cards Expire Too

It’s not just the major credit cards that have expiration dates. Debit and check cards issued by your bank also have expiration dates because the companies, like Visa and Mastercard, associated with the card require it as a measure of security. Banks also use the renewal of an expired card as a chance to market new products and services to existing customers.

How to Effectively Renew an Expired Card

Typically, a credit card company will send out the new credit card a month or so before the card is set to expire but all banks have their own protocol. Always be aware of the dates of expiration on all of your cards (mark it on the calendar) to prevent embarrassing declinations at the checkout counter.

When you do receive the new card, do not just automatically verify you’ve received the card until you read through the new terms and conditions. The credit card company can change them with the new card so double check the APR, grace period times, and the billing cycle. If the terms have changed and you do not agree with the new terms, contact the credit card issuer and ask if you can return to the old terms. If they do not agree, do not use the card. Write a letter to the card issuer to let them know you are in disagreement. Request that your remaining balance be paid as per the old terms. Most card companies will allow you to do this as long as you are not making new purchases on the card.

Another aspect of the new card you want to check into is the new expiration date. As credit card companies use it as a risk protection resource on their end, you may notice a shorter time period for the new expiration date. If the new date is 3 years or less, you might want to contact the issuer and ask why they feel you are a risk.

If you are in agreement with any new terms and everything seems to be in place, remember to activate the card per the provided instructions. A card will not work until you have followed through with the activation steps. Provide only the necessary activation information and remember that whatever extraneous information you provide like an email or a phone number will likely be used for marketing purposes. Once the new card is activated, shred your old card to avoid confusion.

As a last step, make sure that any accounts connected to the card are updated. For instances, if you have your credit card linked to online accounts for bill paying or shopping, you will need to update the profile information and include the new expiration date. Not all companies will notify you when your card has expired but some will. Prevent any payment snafus or delays by keeping a list of online accounts to which your credit card is directly connected for automatic payments.

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