In today's world, you will be hard-pressed to find a consumer who doesn't have at least one credit card in his or her wallet. When used properly, credit cards can be an excellent tool for building a strong financial future. However, one particular aspect of having a credit card that some consumers find bothersome is the expiration date associated with it. There is a wide range of activity that can accompany an expired credit card. Here is a look at what happens when your credit card expires and the things you should look out for as a savvy consumer.

SEE: 10 Reasons To Use Your Credit Card

The Reasons for Expiration Dates

There are plenty of different reasons for having expiration dates on credit cards.

Primarily, expiration dates are placed on credit cards for normal wear and tear. The magnetic strip on the card can become worn and plastic can break. After a certain amount of time, your credit card company will send you out a new card.

The second big reason: fraud prevention. Whether you're using the card in person, over the phone or online, the expiration date provides an additional data point that can be checked to make sure the card information is valid and you are the legitimate user.

Other reasons for expiration dates include opportunities for marketing and a plateau from which the terms of the credit card can be re-evaluated based on credit worthiness.

Time to Renew

Typically, renewing your account with your credit card company is fairly simple. Many credit card companies send out a notification and a new credit card in the month leading up to the expiration date on your existing credit card. Other companies will send out a letter or email asking if you would like to renew.

SEE: 4 Common Credit Card Misconceptions

Confirm That the Credit Card Terms Are Still the Same

Prior to activating your new card, you will want to confirm that the credit card terms and conditions are still the same. Verify that the APR rate is still the same. Payment due dates, fees and penalties are also important items that you will want to make sure remained the same prior to renewing your credit card. Rather than being caught by surprise after you renew with your credit card company, get all the facts in black and white before signing.

The Arrival of Your New Card

Your new credit card typically arrives one to three months prior to your expiration date. Prior to using your new card you will need to contact your credit card company to activate it; typically the card will come with a sticker with a website address or a number to call. Once you add your new credit card to your wallet, remove your old card and cut it with a pair of scissors. The last thing you want is for your old credit card information to get into the wrong hands.

SEE: Should You Close Your Credit Card?

Prime Opportunity to Market New Products

When a credit card expires, the credit card company has a prime opportunity to market new products to its customers. As the customer decides whether to stay with his or her old credit card or upgrade to a newer product with attractive features, he or she will be faced with many options. Prior to selecting any particular credit card, be sure to compare and contrast the various cards against your old one. By fully researching the cards your company offers, you will be fully prepared and know what to expect when that first bill comes in.

The Bottom Line

Facing a credit card expiration date can be a confusing time for many consumers, but often there is much worrying for little reason. Credit card companies do not want to lose business. That is why when credit cards near their expiration dates, you start to hear more and more from the company. This is a prime opportunity for the company to remind you of all the products that the company offers and keep you as a loyal customer. Prior to signing on the dotted line, do your homework so that you are fully prepared for the financial responsibilities involved in owning a credit card.

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