Credit Card Expiry: Do not postpone renewal if the credit card expires! Otherwise you may have to bear huge loss..

There are some numbers written on the credit card kept in your purse - 16-digit card number, your name, and an expiry date. We all see this date, but ignore it because we think that if the card expires, the bank will automatically send a new card to the address. It is true that in most cases, the bank automatically sends a new card to your registered address about a month before your card expires. But sometimes this does not happen. Some common reasons for this are:

Change of address: If you have recently changed your address and have not updated your address with the bank.

Card not being used: If you have not made any transactions with that card in the last 6-12 months, then the bank may assume that you no longer need that card.

Change in bank policy: The bank may now be closing that type of card.

If, for any reason, your new card does not reach you and the old card expires, then the bank can close that account after some time. And this is where the real game of loss begins.

4 big losses of card expiry

1. Your CIBIL score may 'crash'! (Biggest loss)

This is the biggest and most dangerous loss. Your CIBIL score depends on many things, one of which is a very important factor - 'Age of Credit History'.

What does it mean?

When did you take out your first loan or credit card, and how old is your oldest account? The longer your credit history, the more banks trust you and the better your score.

How does the loss occur

If the card that expired was your oldest credit card and it got closed, then your 10-15-year-old credit history becomes 'zero' in one go. In the eyes of CIBIL, you become a 'new' borrower, due to which your score can fall by 50 to 100 points.

2. Credit limit will decrease, CUR will increase

Your CIBIL score also depends a lot on 'Credit Utilization Ratio' (CUR). This means what percentage of your total credit limit are you using? It is considered good to keep it below 30%.

Example: Suppose you have 3 cards, whose total limit is Rs 3 lakh. If you spend Rs 60,000 in a month, then your CUR is 20% (which is very good).

How does the loss occur?

Now, suppose one of your old cards with a limit of Rs 1 lakh expires and gets closed. Your total limit is reduced to Rs 2 lakh, but your expenditure is still Rs 60,000. Now your CUR will directly become 30%. Increased CUR will further lower your score.

3. Auto-payments and subscriptions will fail

Nowadays, we keep many auto-payments linked to our credit cards, such as mutual fund SIP, subscriptions like Netflix, Spotify, Amazon Prime, electricity, water, mobile bills, etc.

How does it cause loss?

As soon as your old card expires, all these payments will fail. This will not only stop your services, but you may also have to pay late payment fees and penalties.

4. You will lose old rewards and benefits

Many times, there are some benefits on our old cards that are not available on new cards, such as being lifetime-free, getting better reward rates on a particular category (such as fuel). Once the card is closed, you lose those benefits forever.

So what should you do now? (Action Plan)

Check the expiry date now: First of all, remove all the credit cards from your wallet and check their expiry date. Pay special attention to the cards which are going to expire in the next 3-4 months.

Update address and phone number: Go to the bank's app or website and check whether your address and mobile number are correct and updated.

Be proactive, call the bank: If you do not get a new card even 20-25 days before the card expires, do not wait. Call the bank's customer care yourself and ask about the status of your new card.

Activate the new card: As soon as you get the new card, activate it immediately and set its PIN.

Update card details everywhere: The most important thing is to go to all your auto-payment and online platforms and delete the old card details and update the new card details (new card number, new expiry date, new CVV).

Disclaimer: This content has been sourced and edited from Zee Business. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.