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Why do credit cards have expiration dates? If you’re like me, you probably haven’t given it much thought, or even paid attention to that date until you get a new card in the mail – or noticed that the one you have is about to expire. But issuers take expiration dates seriously; turns out, they have to. Here are four reasons why credit cards expire.

Reason #1: Fraud Prevention

This is the top reason you’re likely to hear when asking this question. “They are mandated by our operating agreements with Visa and MasterCard to help protect against fraud,” says Natalie Brown, spokeswoman for Wells Fargo.

How do they do that? “The expiration date is used by merchants and issuers to validate that a card is open (through physical presentment at point of sale) and valid (through real-time authorizations),” says Marcy Cohen, VP, senior business leader of worldwide communications for MasterCard. She goes on to explain: “Fraudsters can get their hands on card numbers more easily than they can expiration dates; if counterfeit cards are created and don’t have a valid expiration date, the card will be declined.”

Reason #2: Another Chance to Check Up on You

“A limited term expiration date of say three years (typical), allows the credit worthiness of cardholders to be revaluated on an ongoing basis – in addition to the normal annual review,” says Bob Hammer, founder and CEO of R.K. Hammer, a bankcard advisory firm.

While in the past you’d often get a generous credit line increase when a replacement card arrived, during the past few years some cardholders have received a new card with a lower credit line. But if your credit is strong and you’ve kept your account active by using it from time to time, you probably don’t have anything to be concerned about. And don’t worry that your card issuer might arbitrarily raise the interest rate or add an annual fee to your card when it renews. That’s not allowed, thanks to protections offered under the Credit CARD Act.

Reason #3: So You Can Use It

Depending on how often you use your card and where you keep it when you’re not using it, the plastic may take a pretty good beating. “Cards wear out and the mag stripes cannot work forever, so cards need to be renewed,” says Cohen. “Dates allow the issuer to proactively replace cards on a timely basis prior to the magnetic stripe wearing out, or images becoming worn due to use.” Hammer that adds a “plastic card has only so much life expectancy before the mag stripe and ‘tipping’ (the painted name and numbers on the face of the card) deteriorate, and would need to be reissued anyway.”

If an issuer gets the new card to you before the old one wears out, it’s less likely you’ll reach for another piece of plastic in your wallet.

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Reason #4: To Get a Facelift

If your new card looks prettier than the previous one, there’s a reason for it.

“Card designs are also refreshed periodically and the replacement schedule also helps keep the cards looking up-to-date,” says Brown. Hopefully you’ll like that flashier piece of plastic enough to pull it out of your wallet and use it more often. At least that’s what your issuer hopes.

Image: Brett L., via Flickr

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  • http://credit.com Erne Dornbusch

    When I get a new or replacement card , I immediately sign it and with a laundry pen ( black ) print in bold letters ” PHOTO REQ’D ” on the back of the card. But still hardly no one asked for I.D. Seems everyone is in a hurry !

    • Eric

      I could sign the back of a card saying “GIVE ME FREE FOOD” and that doesn’t place them under any obligation to give me free food. The agreement that anyone who accepts credit cards has to sign has no mention of special instructions written on the back of a card, and by writing that instead of signing it you are actually invalidating the contract you make with the card issuer stating that you will sign the card before use.

      • LM

        Goodness–someone is feeling rather CONFRONTATIONAL today! I believe Erne stated that he did sign the card “immediately”, and additionally added the “instruction”. Are you like this face-to-face also, or just behind your cyber-shield?

    • Elizabeth

      Putting PHOTO REQUIRED on the back of the card is incredibly stupid for several reasons: 1) The card is not valid UNLESS SIGNED and I don’t think your name is “Erne Dornbush Photo Req’d”! So if some one were to check for a signature, technically they should refuse to run your transaction! 2) Without YOUR signature to match to, anyone with a fake id will have an easier time using your card as it is easier to get a fake id online than it is to forge signatures.

  • http://credit.com Erne Dornbusch

    It seems to me , that with today’s technology-computer technique, that cash registers and other cash issueing devices, could be computer chipped , so to speak, that when a card is swipped and something is not right, a small red lite comes on as a warning that the card is not up to standard specs ! All this might be helpful only if the card holder reports ” stolen or lost “.

    • Eric

      It seems you know nothing about how credit card transactions work. First of all, there are computer chips in every single CC processing machine that exists, it isn’t two cups with a string attached where you ask the CC company if it is okay to process and they just pick a random answer. The card is validated against the bank before the transaction can be processed. Generally when swiped if the card has been reported for any sort of fraudulent behavior a message will come up saying that there is a problem. Having a bright red light tells a potential criminal to run, whereas a not-obvious message gives the person accepting the credit card time to say “there seems to be a problem, give me just a moment” while they contact the police. Finally, what, per say, is a technology-computer technique?

  • LM

    A TV news magazine did a report in which they had one of their crew shop with a cc with the photo of an Asian person and signature about three times as long as theirs, also distinctly Asian. The crew member was Caucasian, and very blond, with a short last name.
    She bought numerous items, including jewelry, purses, and who know what. Not one vendor checked the photo or signature. All purchases successful. Scary!
    Also, about the security code, anyone who sees a cc has access to the security code–especially someone like a server at a restaurant, who actually takes the card with them, out of your presence.
    One of my card banks has called me a few times with some red flag items; the other has never called.
    The system is very loose and flimsy, it would seem.

  • Donna

    I just was a victim of debit card theft. I ordered something on-line. It even had a golden paddelock on the top of the web page. So much for safe web sites!

  • Jon Paul

    Q: Why aren’t PIN codes required when we use a credit card, as when we use a debit card and are asked for our PIN to complete the transaction?

    A: Because this would GREATLY reduce the incidence of fraudulent transactions, including online transactions, and credit card companies (i.e., BANKS), could no longer justify their losses due to fraud, and therefore no longer justify and maintain their high interest rates to the governing (Gubmint) bodies.

  • Pingback: Changes in store for credit cards | In Digest Biz()

  • Steve

    Googled this question because it’s that time again; where I have to update half a dozen autopay accounts because of a worthless expiration date. “Reason” 1 made sense when merchants took carbon copies of cards and checked in with mc/visa once a day or once a week long after the customer had left with the merchandise. Now they check instantly electronically; reason 1 is obsolete. “Reasons” 2-4 don’t depend on a card expiring. The issuer could routinely run a credit check, and issue a shiny new card with new magnetic strip and logo whenever they want; no expiration date required. This is an obsolete feature that is nothing but inconvenient in the modern world.

  • Jeanine Skowronski

    You should contact the issuer to see if they sent a replacement card that got lost in the shuffle. If they elected to close your account due to negative payment behavior, you won’t be able to still use the card.

    Thanks,

    Jeanine

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