You’re about to make a purchase when you notice your credit card expires this month. Don’t panic! You’re not alone.
Credit cards generally expire every three to four years from date of issue, so since this occurrence doesn’t happen too often, people tend to forget about it until the actual month of expiry.
If your credit card is expiring this month, it will continue to work until the end of the month and a new card will automatically arrive in the mail, usually a few weeks before the expiration date. You are rarely required to take action to get a new card, but if it does not arrive in the mail, call your credit card issuer.
While your card expires, your credit card account is still active until you cancel it with the issuer.
Why do credit cards expire?
Physical cards expire for some important reasons:
- A credit card’s technology can quickly become outdated, and using older technology can make a card vulnerable to fraud.
- Limiting the active “life” of a credit card with an expiry date helps reduce fraud and identity theft.
- Plastic credit cards deteriorate with age. They’re made of rugged material that makes it hard to break, but transactions requiring an insert or swipe of the card can take a toll on the exterior.
The good news is your new card will have the same number, and you may even become eligible for new special offers and products from the card issuer.
How do I activate a new credit card?
When your new credit card arrives in the mail, it usually comes with the details of your credit cardholder agreement. The card will also have a sticker on it with a phone number to call for activation. Once you call, the new card is typically activated instantly through an automated system, and you likely won’t have to speak to anyone as long as you are calling from a number on file. Some issuers even have the option to activate a card by going to their website.
At this point, you should destroy your expired card to prevent identity theft and fraud. While the card can no longer make transactions, your name and the card number can still help an identity thief establish a new identity.
Next, if you’ve authorized automatic charges to your account (bills, subscriptions, etc.), notify those merchants of your new card expiration date and three-digit Card Security Code (CSC2), which is located on the back of your new credit card. You can update your online payment profiles immediately, or as you make purchases.
What happens if I don’t activate my new credit card?
To start, you won’t be able to make any online or in-store purchases, of course.
But since your credit card account is still active until you terminate it with the credit card issuer, you will still be legally liable for any automatic charges from merchants. This means you could incur penalties, interest and late payment charges and possibly harm your credit score. Typically though, merchants will notify you if they have an issue charging your card, prompting you to provide them with another method of payment.
What happens to my credit score if I don’t activate my new credit card or cancel it?
When you close a credit card account, your credit score may be affected slightly. With credit cards and credit of any kind, the length of time the account remains open is a key factor in determining your credit score. So if you’re cancelling your oldest card, this may be something to consider, though the account will stay on your credit history seven years after you cancel it.
When you cancel a card, you are also decreasing your overall available credit, which could impact your score depending on how much credit you use. To maintain a good credit score, you should keep you credit utilization ratio between 20 to 30 per cent – meaning you should only use 20 to 30 per cent of your total available credit. So if you have two cards with a limit of $5,000 on each, you have a total limit of $10,000 between the two. And if you generally have a $2,000 balance every month, you are currently using 20 per cent of your total available credit. But if you cancel a card, you lose that available credit, and your credit utilization ratio will become 40 per cent if you continue to carry a $2,000 balance each month on the other card.
And again, automatic charges will continue unless you terminate them with the merchant. If they are not honoured, your credit score will also suffer.
Should I close a credit card account before or after the credit card expires?
It doesn’t matter when you close your credit card account, as long as you pay off the balance upon cancelling.
If I cancel a credit card, should I get a new one?
If you’re cancelling a card with the intention of applying for a new one, look into a card that ultimately benefits you in some way, whether it be through travel points, cash back, or even just a good deal on interest rates. The last thing you want is to sign up for a card that does nothing for you – you’re potentially missing out on free money or wasting it on high interest payments.
For example, the Scotiabank®* Gold American Express® card earns four times the Scotia Rewards points for every dollar you spend at eligible gas stations, grocery stores, on dining and entertainment. You can also earn 15,000 bonus points with your first $1,000 in everyday purchases in the first three months*.
Scotia Rewards can be redeemed for a number of things, from travel to merchandise to movies, and from now until March 30, 2018, apply for a Scotiabank®* Gold American Express® card or Scotia Momentum® VISA Infinite* card at RateSupermarket.ca and receive a $50 e-gift card when your application is approved.
Now you can get back to your life as usual with your brand-new shiny activated credit card. Happy shopping, and don’t forget to update your online payment profiles!
This post has been updated.
*To be eligible for the 15,000 bonus points offer (this “Offer”), you must have at least $1000 in net purchases (purchases less returns or similar credits) posted to your Scotiabank credit card account (“Account”) in the first 3 months from the Account open date. The bonus points will appear as an adjustment on your Account statement within 2 statement cycles after the third billing cycle has passed provided the Account is open and in good standing. Offer applies to a new Account only opened by June 30, 2018 (the “Offer End Date”). Former or current Scotiabank credit cardholders that transfer from an existing Scotiabank credit card account or re-open a closed Scotiabank credit card account are excluded from this Offer. Offer may be changed or extended and cannot be combined with any other offer.