There are several reasons why a credit card gets declined, and not all of them are completely obvious. This leads to those unfortunate situations where you’re left at checkout with declined card and no understanding of what the problem is.
Learn about some of the reasons that your credit card was declined, and some solutions that can rectify the problem in only a few minutes.
The Information You Provide is Incorrect
The easiest problem to deal with is user error, namely when you simply provide the wrong identifying information during the transaction. Many payment processing machines ask for information like a zip code, and online shops will usually ask for an address. If you provide information that isn’t connected to the card, then the payment can be declined.
If you recently moved, make sure your address is updated within your credit card company. Your card provider won’t recognize the new billing zip code until it knows that you moved.
Also, if you are shopping online, you might have hit the wrong keys when you were added your credit card number, expiration date, and security code. The first step to understand why your card is declined is to check all of the information you enter.
You can prevent simple errors like this one by setting up your autofill settings within your browser. This reduces human error and makes it easier to complete purchases.
You Don’t Have the Available Credit
Your credit limit is the cap on spending for your credit card. Once you hit that cap, or attempt to make a purchase that puts you over that cap (also called “maxing out” a card), your credit card company may decline your purchase. Credit cards with smaller limits may hit this ceiling with one purchase (like a $300 charge on a card with a $250 limit), or through several purchases over the course of a payment period that exceed your limit.
There are multiple steps you can take if you hit your limit. The first and simplest is to track your spending and pay down some of your debt so you won’t hit your limit. You can also pay off your card completely before making a major purchase to ensure that it goes through.
Some credit companies will charge a fee if you go over the credit limit in addition to outright declining the purchase. This creates an added incentive to make sure your card is in good standing before you make a purchase.
Additionally, it’s not uncommon for companies to put a pending transaction on your card as a form of security deposit. For example, a car rental company may place a hold on funds as a deposit, which is then removed after you return your vehicle in good condition. If you have a large pending transaction, your credit card company may not allow you to make purchases until the pending transaction is removed.
Your Lender Flagged a Purchase as Fraudulent
Credit card fraud is a common form of identity theft. As a result, credit card companies will flag any out of the ordinary purchases that fall outside of your typical buying behavior. For example, a purchase could be considered fraud if it is from a business where you never shop, if the amount is excessively high, or if they receive a purchase in a different state.
Since these holds on purchases are for your protection, it’s a good thing that credit card companies use them. To prevent flags for legitimate purchases, contact your credit provider when you are traveling out of the state or country. You can also alert your card provider about a major planned purchase to prevent an unexpected credit card decline.
Your Card is Expired or You Have Not Activated It
Credit companies set expiration dates that will prevent use after a specific date. As the expiration date on your credit card approaches, your credit company will issue a new card for you to use. Oftentimes, these cards are issued a few months before the expiration date.
Likewise, when you first get your card you need to activate it. This is so the bank knows that you received the card and are ready to use it. If you haven’t activated the card, however, it will be declined by the creditor.
Your Credit Card is Frozen, Suspended, or Closed
Most credit card companies will freeze an account if you fail to make payments on-time. The company loses money if you keep charging the card but can’t make the payments, so they will lock your card and prevent you from making future purchases. If your card is declined, consider the last time you made a payment on your card.
If you are a few days late on one payment, it is unlikely that your credit provider will freeze your account. People are forgetful, and most credit companies understand that you may forget to pay your bill every once in a while. However, if you are significantly late, they will freeze the account until you can make the necessary payments.
Your credit card provider can close your account at any time without warning. There are several reasons why a credit provider may close your account suddenly:
- You haven’t used your card for a while and there is no remaining balance.
- You have broken the terms and conditions of the card agreement.
- You have become a “risky borrower” and the card company has preemptively closed your account.
- The account was closed by mistake.
You will need to contact your credit provider to understand why your account was closed. They may be able to provide steps to get back in good standing. For example, if your account was closed due to inactivity, you may be able to prevent that in the future by making small monthly purchases and paying them off, just to keep the card active.
What to Do if Your Card is Declined
You have multiple options in the event that your card is declined. The first thing you should do is find out the reason as soon as possible and rectify the situation. You can call the credit company to understand what the issue is, including determining if you are up to date on your payments. They should be able to outline the steps you need to fix the situation.
