Dubai: Millions of people use their credit cards to sign up for everything from subscription services to product-of-the-month offers, statistics show.
It’s easy to forget to cancel these things when you don’t want them anymore, but the company can still charge you for them – even if your card has expired.
Why does your credit card have an expiration date in the first place?
Credit card issuers anticipate when a credit card might be physically worn down and need replacing, which is why they include an expiration date on your card. The dates also act as an important piece of verification data.
Although credit cards display their expiration dates near the centre of the card, cardholders tend to forget about them quickly, which can lead to a situation when your credit card is declined because it has expired.
Financial institutions typically assign expiration dates when they issue cards, but a few companies allow consumers to set their own.
Expiration dates don’t apply to your account
Although your credit card has an expiration date, your actual account does not. Even if your credit card expires, you’ll still need to call the issuer and cancel your card if you don’t want it anymore.
When you compare credit cards, you’ll notice that they show a month and year for the expiration date, but not a specific day.
A little known fact about credit card expiration date according to multiple banks is that when your credit card expiration date is listed as month/year, the card is understood to expire at the last day of the month. Although it’s understood to be common practice, contact your card issuer to verify its policy.
A commonly known reason that experts agree with is that your credit card has an expiration date is so that you can replace it before it becomes unusable. Although credit cards are made of a sturdy plastic, they still wear down after years of use.
What does expiration dates mean for fraud protection?
An expiration date adds an extra layer of fraud protection to your account. Retailers check a card’s expiration date and the user’s credit card information to verify the card is legitimate, according to global credit card company Discover.
And anyone who tries to steal data by unlawfully swiping a card’s magnetic strip might have trouble using the information if the card has already expired.
Technology is constantly evolving and credit card companies are always looking for the best way to keep your account secure. Including an expiration date is one way to give you an “upgrade” every few years when a credit card company makes upgrades to its cards, like implementing EMV chip-enabled cards better protect you against fraud.
(EMV is a payment method based upon a technical standard for smart payment cards and for payment terminals and automated teller machines which can accept them. EMV originally stood for "Europay, Mastercard, and Visa", the three companies which created the standard.)
Can my credit card still be charged after the expiration date?
You can be charged even if your card is no longer valid because of a “recurring indicator” that’s included in your transactions, a technology that enables the company to circumvent the expiration date and keep charging you each month.
This is what triggers credit card companies to auto-update recurrent charges with a new credit card. Although there have been multiple instances wherein reminder e-mails from credit card companies are sent to customers stating expiry of the credit card number, credit card charges can still go through and get auto renewed.
So if you thought an expired credit card would essentially mean it is a dud just as if you got a new replacement card due to say identity theft, it’s not. Credit card companies have services in place for merchants to obtain your recent credit card details to continue the billing.
Why is this done?
The logic from the card user’s perspective is that this provides more convenience where you can have a set it and forget mind-set. If you forget to give the merchant your updated card number then this allows your service to continue uninterrupted.
All four of the major global credit card companies – American Express, Visa, MasterCard and Discover – offer “updater” services to provide merchants with consumers’ new credit card numbers and expiration dates. Card updater services are designed to save merchants the hassle of contacting customers with lapsed cards to get their new numbers.
While contracts vary, consumers authorise access to their credit card accounts, not to a specific number or expiration date tied to that account. That means authorised recurring charges can go on regardless of whether a card has expired or been replaced.
For many businesses, automatic renewable contracts provide a steady source of revenue — and many customers welcome the convenience of no-hassle monthly payments. However, things can get tricky when a customer’s credit card is replaced, whether by routine expiration or due to a data breach.
Merchants know if they contact customers by phone to find out their new credit card information, it might be hard to reach some who want to continue their contracts. Other customers might use the opportunity to reconsider whether they need to keep making a purchase and discontinue it.
To avoid such scenarios, business owners often prefer indirect methods of updating customers’ credit card information, such as using account updater services. Given that many merchants use these services, consumers should be certain to formally cancel recurring charges they want to end.
Unfortunately, some merchants make it very difficult for customers to get out of contracts they have auto-renewed, so you may have to be persistent. If you are not happy that a company didn’t notify you it was renewing a recurring charge, contact the merchant and ask to cancel the service.
When the success of a company depends on automatically renewing a product or service people don’t want to buy, it doesn’t have a very sustainable business model. Smart merchants will be responsive when customers want to cancel, because they know they will build a better reputation that way.
Facing a credit card expiration date can be a bit confusing, but generally, there's little reason to worry. Credit card companies do not want to lose business. That's why the company that issues your credit card will contact you when your credit card nears its expiration date.
This is a prime opportunity for the company to remind you of all the products it offers and keep you as a loyal customer. Before accepting any particular offer, do your homework so that you are using a card best matched to your current financial needs and spending patterns.