Why do Credit Cards have an Expiry Date?

1st January 2016 –It is the beginning of the New Year and you decide to take your family out for dinner at one of the most exclusive restaurants in your city. On completion of the sumptuous dinner, you take out your much valued 'exclusive club' credit card for payment. To your surprise, the waiter comes back with the card only to inform you that the card has been declined. Furious at the situation, , you call up your bank as soon as you leave the restaurant and scream at the representative informing them about your unpleasant experience and demand an explanation. The response from the bank representative leaves you even more stumped, their reply being – 'Your current credit card expired on 31st December 2015. As a replacement to the above, we have already despatched a new credit card on dd/mm/yyyy .'

How and why your credit card expired, you wonder. To find out the answers, read below:

One of the foremost reasons for banks issuing credit or debit cards with expiry dates is to PREVENT FRAUDS. The presence of expiry dates on credit cards provides an additional level of security to credit card issuing banks. It makes the task of a fraudster, who has been able to get your card number somehow, even more difficult when making a purchase online or over the phone, as he does not have the expiry date of the card.

A finite term of a credit card allows the credit card issuer to keep an additional check on your CREDIT WORTHINESS apart from the regular processes undertaken by banks largely on an annual basis.

Frequent usage of a card exposes it to wear and tear wherein the MAGNETIC STRIP DETERIORATES and the colours on the card fade hence; it would have to be replaced eventually.

One must also acknowledge the continuous efforts undertaken by banks to develop better products with enhanceD security features and updated CARD designs for your next card. Credit card issuing companies or banks also have a monetary incentive to improve the ease with which you can use your card.  The more we spend, the more issuers make in transaction costs and interest. A worn out card has a lesser probability to being used and can decrease the benefits for the card issuing company.

Lastly, let us not forget that the credit card issuing companies need an excuse to RE-ENGAGE with you. This opportunity to connect with you allows them to showcase upgraded products or even cross-sell new ones.

Almost all credit card issuing companies send out the replaced card approximately a month before your existing card is about to expire. This allows you sufficient time to change your details on all e-wallets and other standing instructions you have subscribed using your previous card.

Here is hoping that you remember to check your favourite credit card's expiry date well in advance and ensure you take necessary the steps for a smooth transition.

Source : articlesbase.com