Credit Card eZine - News and Articles about Credit Cards

Life Cycles of Credit Cards - Expiration and Renewal

2008-04-22

Every product progresses through certain stages. When doing shopping, we pay attention to the expiration dates. The point is, some products become ineffective and even harmful after this date. It's all so clear when it comes to regular products that we buy on a daily basis.

And what about credit cards? Why do they have expiration dates? Does you plastic go bad after a couple of years of its usage? Not a plastic itself but its magnetic stripe. However, it's not the only reason why credit issuers include expiration dates on our credit cards.

In fact card companies and banks have different reasons for setting expiration dates on your card. First off, it's one of the ways of protecting cardholders from ID theft and credit card fraud. Expiration dates happen to be really effective when it comes to credit card transactions made offline, i.e. manually. However, with the rapid development of e-commerce in the US, the expiration dates on credit cards are not so significant from this point of view.

Another reason for setting the expiration date on a credit card is that a magnetic stripe disintegrates over the years. In view of the fact that we use plastics very often, they may get worn off or cracked. In this case, renewal of your plastic is just what the doctor ordered for your dear credit card. When credit issuers provide you with a new card, they may get rested that a magnetic stripe is functioning well. Besides, card issuers need to update the information on the magnetic stripe.

These are the most obvious reason of the exchange your old plastic for a new one. However, there are also some other reasons for expiration dates that will never come to your mind. Sometimes, creditors and banks use this opportunity as an excuse to get in touch with their clients and remind them that their credit card is still available.

In view of the fact that a shelf-life of a typical credit card is about three years, it's a good chance for creditors to re-establish the contact with their clients. So even if you haven't used some plastic for a long time, you may simply forget about its existence. A notice from your creditor generally triggers a positive response.

Anyway, with today up-to-the-minute technologies, expiration dates are not so practical as they were years ago when companies checked credit card records of their clients. This way, after a couple of years they had a right to change the terms and conditions of a credit card contract in case they saw a cardholder wasn't as good as they had expected.

Now that creditors can change credit card rules any time for any reason, there's no need to wait for two or three years. They can do that whenever they need it, however a cardholder should be notified about the change within 15 days.

If your plastic is nearing the expiration date, take a closer look at your mailbox. Creditors generally send a new card the month before your plastic expires. Though, it mostly depends on the issuer, so call your card company if you've got some questions.

When you receive a new card in the mail, check its terms first. They may change. If you are not satisfied with the new terms, notify the creditor in writing. In this case, your creditor may let you pay off your balance under the old terms.

I know that some rewards plastics give bonus points upon credit card renewal. Card companies want to have loyal clients.