8 Reasons Your Credit Card Was Declined

8 Reasons Your Credit Card Was Declined

Imagine that you’re standing at the checkout counter and the cashier informs you that your credit card has been declined. Not only is this an embarrassing situation to be in, but it can also be an inconvenience. If you don’t carry cash, you’re left scrambling for another method of payment. 

After the embarrassment has subsided, confusion about why your card was declined usually starts to set in. Because we’ve become so dependent on plastic, it’s important to understand the reasons why your card might have been declined.

You’ve triggered the fraud protection

Data breaches have become common and credit card issuers are losing millions of dollars each year to fraudulent activities. In order to protect not only themselves, but also you the consumer, they will shut down a card when suspicious activities take place.

Maybe you make a purchase that is much higher than your typical spending habits would expect. Maybe your card is being used on a foreign website. If the spending patterns don’t add up, your card may be declined.

When this happens the card issuer will usually call or text you immediately. They want to speak with you to make sure the purchases you are trying to make are in fact legitimate. If they are, the hold will be removed from your account and you will be allowed to make your purchase.

You’ve reached your credit limit

Each time you receive a new credit card the issuer assigns a specific credit limit. This is the maximum amount of credit that is extended to a borrower at one time. Credit limits are usually established based on a consumer’s credit profile and spending habits.

If you spend up to your credit limit, then you will need to pay down your current balance or ask your issuer to raise your limit. Some credit cards will also assign a daily credit limit. If you try and make a purchase that exceeds either of these limits, they will usually decline all purchases until a payment on your account is made.

It’s also important to keep your spending below you credit limit since there can be an impact to your credit score. Credit utilization makes up 30 percent of your credit score. Most credit experts advise keeping the total amount of credit used to no more than 30 percent of your available credit.

reached credit limit
Your card may be declined because you had reached your credit limit

Personal information doesn’t match records

Have you ever entered your credit card information to make a purchase online only to be told the information is incorrect? Maybe you mistyped the credit card number, or even mixed up the expiration date. You could have also entered an old billing address that is no longer valid. No matter what the reason might have been, your card will be declined if the information doesn’t match up with what the credit card company has on file.

Usually all you need to do is re-enter the card information and move forward with your purchase. However, if you continue entering incorrect information then your card issuer might decide to freeze your account until they have a chance to speak with you.

You’ve missed credit card payments

Credit card issuers extend their cardholders a line of credit with the assumption that a portion will be repaid when the statement closes. When this doesn’t happen, they are going to take steps to make sure they are paid.

The first month you’re late, most issuers won’t do anything except issuer a late fee. However, if you’ve missed multiple payments then there is a chance a freeze might be placed on your account. In some instances they might even close your account permanently. The severity of the action will depend on the credit card issuer and your past history.

Your card has expired

It’s no secret that many of us live very busy lives. Occasionally things can slip right by without us even noticing. The expiration of a credit card is one of those things. Often times the new card is forgotten about in a pile of mail.

Unfortunately, if you try and use a card that has passed its expiration, your purchase is going to be declined. Your credit card company will usually send you a new card a few months before the old card is scheduled to expire. Make sure you swap out cards as soon as you receive the newest copy.

If you don’t receive a new card, then one of two things might be the case. It was either lost in the mail or your credit card company has decided not to renew your account. If the later is the case, you will receive a letter in the mail explaining the decision.

Credit card expiration
The reason for a card being declined might be the expiration of your credit card.

Primary user deactivated the account

Many times business owners will make their employees authorized users on a credit card account. The same can be true with families. One person might make their spouse, sibling, or child an authorized user. Unfortunately, if the main cardholder cancels the card or even reports their card lost or stolen, then that will affect all authorized user cards. If you were to try and make a purchase, the transaction will be declined.

As the main cardholder, always keep others in the loop on anything that might have changed with the account. This will help save everyone a lot of frustration.

You’re making an international purchase

Let’s assume that you live in Denver and that is where a majority of your card purchases are made. Then one day you leave for a vacation in Rome and you attempt to use your credit card. Since this will look a little suspicious to your credit card company, they are most likely going to decline the purchase until they have a chance to speak to you.

Before you travel away from home, even if it’s just to a new state, make sure you call your credit card company. Let them know where you will be traveling so they can put notes into your account. This will save you from the stress of a declined credit card.

Hotel or rental car company has placed a hold on your account

Each time you use your credit card to stay at a hotel or rent a car, a hold is placed on your account. Sometimes this could be as little as $50 or as high as a few hundred dollars. The reason for this is to make sure you have enough available credit to cover any potential charges or damages.

Sometimes this hold can remain on your account for several days. If you are nearing your credit limit then this could cause you to hit your max and have future purchases declined.

To help avoid this from happening, make sure you travel with more than one credit card if possible. Make all purchases requiring a hold on one card, and then use another for your everyday spending needs.

The last thing any of us want it to have our credit card declined. However, it happen occasionally. Sometimes because of our spending and other times because we didn’t plan ahead. If you’re ever told that your credit card has been declined, it’s probably because of one of these eight reasons.

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