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Anytime a credit card transaction fails, things can get uncomfortable.
You’ve made it to the register, ready to complete your purchase. You present your credit card, and you wait. You wait a long time. And then the cashier must deliver the dreaded message: Your credit card has been declined.
It’s a common experience and may be caused by any number of reasons. But when it happens to you, it’s frustrating, embarrassing and if you don’t have an alternate form of payment, it can be a huge hassle.
Knowing why your credit card was declined and what steps you can take to prevent it from happening will help ensure your next transaction goes through without a hitch.
1. You met your credit limit
Maxing out your credit card, or reaching your card’s credit limit, is a surefire way to have your card denied.
Your credit limit is the amount of credit your issuer agrees to extend to you and can be found in your cardmember agreement or by contacting your issuer. Cards for people who are new to using credit or who have poor credit may have low credit limits of $500 or less—while individuals with excellent credit may have credit limits close to $20,000.
If your credit card purchase exceeds your credit limit, your purchase may be denied. You should know the credit limit and keep track of balances for each of your credit cards so you aren’t blindsided by reaching the limit before your monthly statement period ends. If you find yourself close to the limit regularly, contact your issuer to request a higher credit limit so you have more of a spending cushion.
In order to keep your credit score in good standing, it’s smart to keep your credit utilization rate below 30 percent. In other words, keep your balances below 30 percent of your overall limit. If you’ve reached your limit, work on a plan to begin paying down your debt before attempting to spend more. Consider transferring your balance to another card with a low or 0 percent interest rate or take on a lower interest personal loan. To quickly determine your current ratio, check out Bankrate’s credit utilization ratio calculator.
Keep in mind, a credit card issuer can reduce your credit limit if your credit score has dropped or you’ve continuously missed payments, but the issuer must give you 45 days’ notice before making a change.
If you use your credit card to make a purchase while traveling—whether you’re paying for dinner at a restaurant or picking up souvenirs—simply attempting the transaction in a different city could cause an issue with your bank.
Logging a lot of credit card activity in different locations (both domestic and internationally) raises a red flag to credit card issuers that your card may be stolen. As a result, your issuer may lock your accounts and prevent any purchases from going through in order to protect your information.
To avoid losing access to funds while traveling, notify your bank and credit card issuers of your travel plans in advance. A quick preemptive call to the number on the back of your card will save you the headache (and potential international phone bill) later.
3. Your large purchase was flagged as fraud
If you splurge on a spending spree or use your credit card for a large purchase, your credit card issuer may flag your account. Similar to travel, any card activity that’s outside of your ordinary spending habits may trigger fraud protection and lead to your issuer freezing your account, causing a card decline.
Again, notifying your credit card issuer of changes in your spending helps to fend off account locks. If you have more money to spend long-term, requesting a credit limit increase will allow you to spend more each month while preserving your credit score. Just make sure you’re still able to stay on top of your balances.
4. Incorrect payment information
When attempting to make your purchase, especially online or via mobile app, it’s easy to incorrectly enter a digit of your credit card number, expiration date or security code. Or perhaps your billing address is outdated. These could all be simple explanations for a declined transaction. Double-check your card information to ensure it’s correct.
Too many accidents like this can result in a freeze on your account, though. In that case, you may need to contact your issuer to clear up any misunderstanding.
Always enter your information carefully and review it before hitting submit, especially if you have multiple billing addresses. You should also be diligent in notifying your issuer anytime you have a change of address, as up-to-date personal information helps prevent fraud.
5. Missed payments
After you miss a payment for the first time, you should contact your issuer and settle the missed payment as quickly as possible. But if you have a history of missed payments, you may find your card getting declined at the register, even if you’re just a few days past your due date.
In some cases, you may be able to make a payment on your phone while you’re in the store and finish your transaction. But if you’re consistently missing payments, consider using autopay or setting up a notification to remind you when your statements are due.
Not only do missed payments make it impossible to use your card, but they can also have a negative impact on your credit score and dramatically reduce your ability to qualify for the best rewards credit cards or competitive loan rates in the future.
6. An expired or deactivated credit card
Trying to use an expired card or a deactivated account will nearly always result in having your transaction declined.
Look for your new credit card in the mail as soon as three to six months before your current card is set to expire. Even if you receive it before the expiration date, you don’t need to wait. Activate it as soon as you receive it, and destroy your old card. If you don’t receive a new card, you’ll get a letter that explains your options for paying off your remaining balance.
Similarly, any change the primary cardholder makes to an account on which you are an authorized user can affect your activity. For instance, if a card is reported lost or stolen, all cards on the account will be temporarily deactivated until new ones are issued. That’s also the case when the primary cardholder reaches the account credit limit or misses a payment. Even as an authorized user, you may be affected.
Always stay in communication with the primary cardholder of any accounts your information is on, and keep tabs on any upcoming expiration dates that may impact your card use.
7. There’s a hold on your card
Large purchases can also become a problem when a hold is placed on your credit card. Rental car companies and hotels may put a hold on your credit card that isn’t lifted until a few days after check out, or you return the vehicle.
Be sure your credit card has enough available credit to accommodate multiple holds at the same time. It can take a while for pending holds to charge or fall off your statement. You may be able to get it removed by contacting your issuer or the merchant, but patience is usually key in this case. Consider using one card for booking your hotel and transportation, and another for daily spending, so you aren’t stressing the limits on one card.
What to do when your card is declined
While it’s an annoyance, in many cases, your card may be declined as a protective measure. In other cases, the problem can be solved with a phone call or by tracking your spending better. Keep the lines of communication open, and you should enjoy uninterrupted card activity.
The next time you do find yourself faced with a declined card at the register, here are some tips for how to handle it:
In the moment
You should always have more than one way to pay. Even if your card isn’t declined, you may run into issues with a merchant that doesn’t accept your card issuer or takes cash only. Keep another card as backup, plus your debit card and a bit of cash in your wallet just in case.
You can attempt to call your issuer on the spot to try and solve the problem quickly, if your declined card is your only available form of payment. But that’s probably not the most efficient option. Save your purchase for another time and leave the store to figure out what the issue is.
If you find yourself in the worst-case scenario, left without a backup payment for goods or services you’ve already used, try calling a nearby friend or family member who can help you out on short notice.
Otherwise, you should look to the merchant to work out a plan. Give the business your contact information and ask if you can return later on with your payment. Stay calm and polite, and cooperate with the manager or business owner so you can find a viable solution for both parties.
The first item on your to-do list after your card is declined should be calling your credit card issuer. Your issuer will be able to determine why you were unable to make the transaction, and help you work out a solution to regain access to your credit line.
If it was a case of suspected fraud, you may be asked to verify previous purchases or your location to prove you are the account holder. If your card is expired, you’ll need to go home and activate the new card. Missed payments and closed accounts may be a bit more time-consuming to solve, but your issuer can help you explore options for repayment and bring your account back in good standing.
How to prevent your card from getting declined
By proactively managing your credit card accounts, you can work to prevent your credit cards from being declined. Here’s a quick rundown on a few things worth doing to avoid an unnecessary decline:
- Stay below your credit limit. If you max out your credit card, any purchases you attempt to make with it will most likely be declined. Keep an eye on your balance and if you get close to your credit limit, make a plan to pay it off before its due date.
- Sign up for account alerts. Most credit card issuers give cardholders the option to sign up for text or email alerts that notify you of any suspicious activity. You can also sign up for balance and spending notifications. If you’re the ‘out of sight, out of mind’ type, toggling these alerts on will help you better manage your accounts.
- Pay your balance on time. To protect your credit score and your ability to make purchases, practice solid financial habits by always paying your balance on time and in full every month.
- Notify your issuer of any travel plans. In order to avoid being stuck in a foreign country on spring break without a payment method, call your issuer and let them know where you will be traveling. This applies to domestic travel as well.
The bottom line
Even if you follow every step mentioned above, you can’t be certain your card won’t ever be declined. Sometimes it’s a matter of making a quick call to your issuer in order to approve a legitimate purchase they flagged as fraud. Although it may seem like a minor inconvenience, the extra level of security isn’t hurting anyone.