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Credit card expiration dates refer to the expiration of your physical card and not your actual credit account.
Expiration dates are important for ensuring you are fully protected against fraudulent activities and for replacing damaged and worn-out cards.
Once your card expires, your issuing bank will automatically send you a new one in the mail.
Use your card expiration date to re-evaluate your spending and where your money is going.
Have you ever asked why your credit card expires? Like most things in this life, nothing lasts forever, and that includes the handy rectangular plastic or metal card you swipe or tap to purchase things.
Credit cards allow you to make purchases and payments in a fast, secure, and convenient manner. According to the Canadian Bankers Association, 72% of Canadians own at least one credit card with 76.2 million Visa and Mastercard in circulation in the country. And a generic Canadian credit card expires within three to four years from the date it was issued.
It would be convenient if credit cards didn't expire. However, credit card expirations are there for very good reasons.
What is a Credit Card Expiration Date?
Your card's expiration date is conveniently placed on the front of your credit card. Your card is active up to the month and year identified on your card.
It appears as the two-digit month and year format. For instance, your card's expiration date is 10/24, which means your card is valid until the last day of October 2024.
It’s also imperative to note that this expiration only applies to your physical card and not your actual credit account. You just need to renew your card, and your account will remain active unless the issuing bank decides to close it for lousy credit standing or for whatever reason deemed necessary.
Keep in mind that your credit card issuer (the company or institution that provides your credit card) evaluates your account when your card is nearing its expiration. They also keep your record for sending you a new one 30-60 days before the expiry of your current card.
Some issuers send letters to cardholders asking if they would like to renew. They also send alerts and notifications to your email to remind you that your credit card is about to expire and a new one is on its way.
Your credit history is also a factor for your credit card issuer raising or lowering your new credit limit. Banks have the right to terminate the account for cardholders with poor credit standing, so swipe responsibly.
Why Do Cards Have Expiration Dates?
Renewing the validity of your credit card after a few years may seem like an unnecessary hassle, especially if you encounter no problems using it. Still, this practice is crucial in ensuring that your card is in good condition and your data is secure.
Why do credit cards have expiration dates? Here are some of the reasons why:
Fraud Protection
Your credit card's expiration date is a vital anti-fraud security feature. Credit card expiration, together with the CVV code, help avert fraud schemes and unauthorized purchases.
CPA Canada's 2020 Fraud Study shows that out of 34% of respondents who have personally experienced fraud, 18% were victims of credit card fraud.
People may gain access to your credit card number even if the card is in your possession. However, thieves can't use your credit card for any transactions if they don't have the CVV code or the expiration date.
Plus, merchants may find it doubtful if someone wants to purchase something without the complete credit card details. They may consider it a red flag and will not initiate the transaction.
A newly issued credit card will have the same number but a new security code and expiration date. This prevents old cards from being used if they come into the possession of other people.
Card Longevity
Let's face it, credit cards, like most of the things we own, do experience normal wear and tear. Even if they look in good condition, repeated use can damage the card's magnetic strips and chips.
When used in physical transactions, worn-out cards can be inconvenient if the merchant's terminal can't read them to verify your payment. Heavy use can also take its toll on the card's delicate plastic material, and there are instances where it cracks and splits.
You don't want to be stuck in the grocery line trying to complete your transaction when your card gives out or the machine can't read it.
Account Renewal
Account renewal is one of the ways your bank keeps its customers. Expiration dates serve as a nudge to use your account if you seldom use the card in question because you utilize several credit cards.
Let's say you decided to pay off your credit card debt and no longer use the card for transactions, but your account is still active. Your credit card issuer will send you a new card around its expiration date to re-market themselves to you.
Some banks will give added perks and features to encourage you to use the card if you don't use it that often. It is a way to offer you a service that better fits your needs and transaction requirements.
You have the right to decide whether you want to renew your credit card or not. This time is also a good chance for you to examine your card's terms and conditions and your spending habits.
You can request your bank to make product changes, reward structures, and payment options that suit your spending.
Card Security Updates
Credit card expiration provides an excellent opportunity for your issuer to appraise and implement the latest updates and technology to secure your card.
New card technologies such as chips and added features benefit both the cardholder and the bank by offering the most up-to-date security.
When you have an up-to-date credit card, you'll have peace of mind knowing that you are safe from possible fraudulent and unauthorized credit card activities.
You may notice that your new credit card comes with the latest technology. For instance, a microchip that safely encrypts transactions for better security, or a contactless capability wherein payment is transferred by placing your card a few inches from the terminal to complete the transaction.
You may also receive transaction alerts whenever your card is used and experience a more seamless and convenient payment experience.
Branding and Marketing
Once your card is nearing its expiration date, your card issuer may offer new programs, perks, rewards, and better protection. Credit card companies use this as an opportunity to market their new products and services, especially if you have good credit standing.
Your card issuer may send you a few credit card offers that allow you to upgrade your current account or sign up for another account in addition to what you currently have, depending on your creditworthiness.
Credit card branding also changes from time to time. The credit card company can effectively promote rebranding and design updates by issuing a newly designed credit card.
Credit card expiry affords credit card companies the perfect opportunity to please and keep their loyal customers.
How to Renew Your Credit Card
The fun part is that you don't need to do anything to renew your card once your current one expires. Your credit card company will automatically process your renewal. As soon as the expiry date approaches, you will receive an email informing you that your new card is on its way.
Your credit card's expiry is a good chance to inform your issuer to discontinue your account if you wish to terminate your relationship based on the terms and conditions of your account. However, if you want to renew, take this time to evaluate how wisely you use your card.
Your new card will be sent through the mail in a discreet and ordinary envelope to prevent credit card theft. Check your mail carefully when you are expecting to receive one to avoid accidentally throwing it away!
When you have your new card, you need to activate it before you can start using it. Instructions on the activation process are included in the mail.
Usually, you need to call your issuer for activation, or you can go online and follow the activation instructions. Once activated, you can use the new card immediately without waiting for the old credit card to expire.
It is also wise to go over your card's new terms and conditions since they may be updated. Look for important details such as your new payment due date, fees, and credit limit.
If you haven't received a new card by the time of the expiration date, you can call your credit card company to check if they have already mailed your new card. In the meantime, you can use alternative payment options until your new card arrives.
What to Do When Your Credit Card Expires
The expiration of your credit card is a great chance to go over how you use your card. Review your statement of accounts and study your spending. Doing so can provide great insight into how wise and responsible you are in your finances.
If you wish to improve your credit score, you may evaluate your automatic charges and subscriptions. Since you have a new card, there is no need for you to update your payment details on services you want to cancel.
Suppose you opt to continue your subscription and automatic charging services. In that case, you must call each vendor to update your credit card information.
You should also cut up or shred your old card once your new one is ready to use. This is to prevent credit card theft and fraudulent card transactions. For extra safety, you can cut your card into pieces and throw them into separate trash bags. This practice keeps your information from falling into the wrong hands.
What Happens When You Use an Expired Credit Card?
Once your credit card expires, you will not be able to use it. Typically, a card will stop working after the expiration date.
Credit cards usually expire on the last day of the expiration month. Even if your card expires, your account remains active. You are still responsible for paying your monthly obligations and any balance your card carries.
It is essential to note your card's expiration date to follow up with your bank and wait for it to be delivered.
Which is Better: Credit vs. Debit Cards
Many Canadians prefer to own both a credit card and a debit card. Both offer easy and convenient payment options for various purchases and other transactions.
Credit cards provide access to a credit line from the bank where your card was issued. A debit card, on the other hand, deducts money straight from your bank account.
Although credit cards offer better fraud protection since they are not directly linked to your bank account, debit cards have lower fees.
Most debit cards do not offer rewards and perks. However, a KOHO Prepaid Mastercard Card allows you to earn money on the money you spend by encapsulating the benefits of a credit card in a secure and low-risk debit card.
Credit cards are a big responsibility, and it is wise to use a debit card or prepaid card as much as possible to help you eliminate debt and develop a positive money habit.
Final Thoughts
The credit card expiration date is here to stay. Aside from giving you a new and shiny card to use, expiration dates protect you from fraud and theft. Expiring credit cards are beneficial for you and for vendors and merchants as well as your issuing bank.
Remember to activate your new card and properly dispose of the old one. Take time to review your new terms and conditions and update your payment information for hassle-free transactions.