Why is a Credit Card Expiration Date Important?

Learn why a credit card expiration date is important and how it affects you

Credit cards can be great little financial tools. Many consumers have no idea that their credit card is an amazing mini computer in the shape of a credit card and not many understand what the numbers on the credit card signify. In addition to the normal credit card numbers, there is also an expiration date.

Why does a Credit Card Expire?

There are a few reasons why the expiration date exists, the main reason is that the magnetic strip on the back of the card wears out after a period of time. When this happens, the card can no longer be accepted at ATM machines or at a store checkout. Most cashiers will take the time to enter each and every number, but it will delay the checkout process. Credit card companies try to avoid this by expiring the card before it wears out.

Credit card companies also use the expiration date on cards to be able to contact the customer and remind them that their card will expire soon. They will also use the opportunity to introduce new products and services and can survey their customers to get their opinions. Often times, these are part of the terms and conditions of the credit card company, which you agree to when you sign the contract. This is one of the reasons that it is critically important that you read and understand everything before you sign.

Perhaps the most important reason that credit cards have an expiration date is that it limits the threat of identity theft. With an expiration date, additional cards cannot be approved when the card expires.

Renewing Your Card

There are many consumers who use their credit cards in an emergency only. Often times they forget that they even have a credit card, only to be reminded of it when they are notified that the card will expire soon.

It is not difficult to renew your credit card; in fact, you do not have to do anything. The credit card company does it all. You will be sent a letter stating the date that your credit card will expire. A new card will be sent to you in the mail, along with a password that is sent separately so they do not arrive on the same day. This is a security measure. When the expiration date of the credit card arrives, all you have to do is to activate your new card and cut up the old one. This step is important because identity thieves are everywhere and are waiting for the opportunity to strike.

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