When you make a payment online using your credit card, the website asks you to enter card number, credit card expiration date and CVV. Card number helps in identifying your credit card account with the bank and CVV is an additional identifier which also protects you against fraud. But what is the purpose of expiration date? Why do credit cards have expiration dates in the first place?
There are multiple reasons why banks issue cards that are valid for only a certain time period. But the first point to note here is that the credit card expiration date applies only to the card and not to the associated credit card account. This means even if your card has expired, the account remains active. Only month and year of expiry is mentioned on the card which means that the card will be valid throughout the given month but not after that. For example, if the expiry date mentioned on the card is 10/18, it should be valid through October 2018 but as soon as October ends, the card will be invalid.
You are most likely to get a new credit card from the bank a month in advance. If you have not received it during the expiry month, you should contact the card issuer.
So, what is the purpose of credit cards expiration date?
Three main reasons can be attributed to why credit cards come with expiration dates.
Credit card is just a flimsy piece of plastic and cannot function forever, especially with such frequent use. You swipe or dip your card in PoS machines several times; cards also go in and out of your wallet so many times. This causes wear and tear on the face of the card. The magnetic strip also gets numerous scratches with every use which can cause problems with proper functioning of the card. To avoid such functional issues, banks keep giving you fresh credit cards every few years.
- Fraud Protection
Credit card expiration date also acts as a protection against fraudulent usage. At the time of making payment in absence of physical card such as online payment, card expiration date acts as an additional checkpoint that the gateway uses to confirm that the entered details are valid. Card number, expiration date and CVV need to be used in combination and correctly in order for a transaction to be approved. Even if a fraudulent user has your card number, without correct CVV and credit card expiration date, he cannot make a successful payment.
- Technology Upgrades
Technology is playing quite an important role in the financial world nowadays. They keep rolling out upgrades on debit and credit cards every now and then. Expiration of the old card and issuance of a fresh card ensures that the upgraded technology reaches everyone. Sometimes a mandatory upgrade might be launched which requires banks to automatically upgrade your card and send a fresh card to your address, even if the old card has not expired. The recent EMV chip upgrade on debit cards is an example of this.
Sending a fresh credit card to their customers every few years also gives an opportunity to the bank to market itself or to promote a related product. Sometimes, banks or financial institutions might make a change in their brand name or brand logo. This change will also be made on the fresh card.
What to do when your credit card expires?
There is simply no use to keep an expired credit card as it would not be accepted for payments anywhere after the expiration month is over. It is good practice to destroy the expired cards or shred them in a paper shredder. Most of the time, banks send the new card prior to the expiration month. However, there are a few things you must keep in mind.
- If your communication address has been changed, get it updated in the bank’s system by calling on their customer care number at least two months before the credit card expiration date.
- If you have not received the new credit card in the expiration month, simply call the customer care number written on the back of your old card and explain the situation to the support executive. He/she will assist you.
- Once you get the fresh card, you must update it at all utility bill payment websites wherever old card details have been provided so that no bill remains overdue.
- You should also remove old card from shopping websites and update new card details if you want to do so.
You will notice that the new card number is same as the old one. However, the CVV will be different to protect you from any type of fraud. Credit card expiration also saves you from making unnecessary payments every month. For example, that gym membership you took on your card but never visited, the magazine subscription on auto renewal, etc. would not continue to eat into your card limit as the connected card would have expired after, say, 2 years. These expenses seem small but if you take a closer look, you do not even need to make these payments. Card expiry saves you from some extra bill.
Some users also wonder whether the new credit card would have different terms and conditions. This should not be a reason to worry as the fresh credit card will be the same as the old one when it comes to terms and conditions or fees and charges. If any such changes are being made, banks are required to inform you at least one month before such change comes into effect through email and post.