Why Credit Cards Expire

For anyone who has ever experienced the taste of sour milk or the sight of moldy bread, you understand the need for expiration dates…it only takes one "encounter" to turn you into the most vigilant "date checker." And while it makes sense that your groceries should have an expiration date, why does a credit/debit card "expire?"

Many card companies explain expiration dates in terms of security and protection. Betty Reiss, spokeswoman for Bank of America concurs, "(expiration dates) provide another verification point." And while this is certainly a valid reason, expiration dates are becoming less significant as the industry moves toward electronic authorization of transactions. Moreover, cards can crack or the magnetic strip simply wears down. As a result, every three or four years as determined by the card company, you are sent a shiny new card ready for use.

However, more than being just an act of good customer service, the replacement of a card also allows the issuer to update information about the cardholder—a self-serving exercise.

• Cross-Sell Opportunities: An expiration date provides the company with an opportunity to update your personal information in order to market other services. Included in the mailing of your new card you may find a number of advertisements for new products and specials offered by your credit card company or bank.
• To Keep in Touch: If you have been a customer for a number of years, this is a chance for the company to re-establish contact. Moreover, if your card is active, but has been inactive for some time, the new card may serve as a reminder to the consumer that this credit is available for use.

So why is this information important to you? Well, to begin, in the age of security protection, it makes sense to know when a new card has been mailed so that if you don't receive it (especially before your old card expires) you can notify the issuing company. And, remember to cut up your old card once you activate your new one. This will reduce the chances of confusing one card for the other as well as preventing identity theft and fraud.

Further, many credit card companies will send a new card with new terms and conditions. It is important that you read the new terms of your agreement for changes in billing cycles, APR, and due dates. If you are not satisfied with these changes, you may be able to renegotiate your contract, or at the very least, pay off your remaining balance under your old terms before closing the account. If you believe that your issuer values your business, you are generally able to negotiate for a better rate or terms.

For those DMB clients who have completed the debt settlement portion of their program and are nearing the end or have completed their credit enhancement agreement, they may soon find their mailboxes filled with "pre-approvals" and new card offers. Also, be diligent about re-establishing a new credit card contract with one of your previous creditors since re-opening a credit card that has been settled or closed may lead to a myriad of changes in terms, conditions, and expiration dates.

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