Credit cards come with an expiration date printed on them. Once that month passes, the card is no longer valid for use. Credit card companies use card expiration dates to prevent fraud. Your credit issuer also uses the expiration month as a reason to send out a new card, as most cards look pretty worse-for-wear after three to four years of use.
Inactive credit cards do not make money for the credit card issuer. If your credit card is sitting at a zero balance with no recent activity, your credit card issuer may use your expiration date as a reason to close your account. According to Credit.com, credit card issuers use your expiration date as an excuse to re-evaluate your account and revise limits and interest rates. There is no guarantee that your issuer will cancel your card at expiration.
In fact, many creditors automatically send out replacement cards a month before your card expires. Your replacement card comes with a new three-to-four year term and may include additional stipulations, including a change in interest rate or a credit line change. Read the documentation carefully before you activate your new card. If you receive a replacement card in the mail, expect your account to remain open until you cancel the card. According to CNBC, some credit cards do not have to be activated in order to be used.
Canceling A Card
If you decide you do not want your credit card renewed, you need to cancel the card. Make sure your credit card balance is at zero before you cancel the card. To cancel it, contact the credit card issuer by phone using the number on the back of your card. Tell the representative you want to cancel your card. Follow up your telephone conversation with a certified letter confirming your balance of zero and requesting immediate cancellation of your card. Cut up the old and the new cards.
Your Credit Score
Before you make that phone call, make sure you understand the effect on your credit score. A large part of your credit score is made up of your total utilization -- the balance of your credit cards in relation to your limits. By canceling your card, you lower your total available balance and up your utilization. Expect a decrease in your credit score. Depending on the age of the credit card, canceling an old card could also lower your credit score.
- Bankrate: Should You Cancel an Unused Credit Card?
- Credit.com: Why Do Credit Cards Have Expiration Dates?
- Bankrate: Cancel a Card, Hurt Your Score
- CNBC: Think Your New Credit Card Isn't Activated?
- Consumer Financial Protection Bureau. "Can My Credit Card Company Change the Terms of My Account?" Accessed Feb. 29, 2020.
- FollowUpThen. "How To Use." Accessed Feb. 29, 2020.
- Discover. "New Card Activation." Accessed Feb. 29, 2020.
- American Express. "Request a Replacement Card." Accessed March 1, 2020.
Leigh Thompson began writing in 2007 and specializes in creating content for websites. She has been published online in various capacities. Thompson has an associate degree in information technology from the University of Kansas and is working on a bachelor's degree in business and personal finance.