5 common reasons your credit card is declined


We want to help you make better informed decisions. Certain links on this page – clearly marked – may direct you to a partner website and earn us a referral commission. For more information, see How we make money.

Finding out that your credit card has been declined can be embarrassing, if not worrying.

But a card can be refused for a variety of reasons, and that’s not always a cause for concern. The most common reasons your card may be declined, according to Bola Sokunbi, a certified financial education teacher and founder of personal finance website Clever Girl Finance, include no credit on the card and fraud alerts on your card. account blocking new transactions.

Besides insufficient funds and suspected fraud, there are several other reasons why your card may be rejected. And you can take steps to anticipate many of them – or at least reduce the chances of your card being declined the next time you’re out dining or making an online purchase.

Pro tip

Always carry another form of payment, such as your debit card or cash, in case your credit card is declined.

Here’s a breakdown of why your card may be declined – and what you can do to prevent it from happening.

1. You’ve reached your credit limit

Your card may be declined if you have reached the card’s credit limit or the upper limit of charges that you can put on the card. It’s how your bank tells you that you can’t borrow money until you make a payment.

“Let’s say you have a credit limit of $ 4,000, your balance is $ 3,500, and you try to put in there for $ 1,000 of things – they’re not going to allow that to happen again most of the time.” time, ”says Anna N. ‘Jie-Konte, a certified financial planner and founder of Dare to Dream Financial Planning.

Maximizing your credit card hurts your ability to shop, but it’s also not good for your credit score and can lead to long-term debt. In addition, reaching your credit limit is detrimental to your credit usage – the ratio of your credit card balances to your overall limit – strongly influences your credit score. You will increase your chances of having a good credit score if you don’t exceed 30% of the available credit on your cards and ideally keep your usage below 10%. In general, the less credit you use, the better your credit score.

You may be more likely to maximize your card if you keep a balance because you add fees to the balance you already have, which also affects your usage – one more reason to pay your bills in full each month.

“Yes [your card is declined] due to your credit limit, that means it’s time to assess what you’re buying and take stock of your finances – what you’re earning versus what you’re spending – to see if there is any. a gap there ”, explains N’Jie-Konté.

2. Fraudulent purchases

Credit card companies can usually spot fraudulent purchases made on your card before you do. If you try to use your card in an unusual location or make a larger purchase than usual, it may trigger the issuer’s fraud detection and block the transaction.

Sometimes a purchase you make looks like a fraud, but it isn’t. If so, you can usually resolve the issue with your credit card company through an SMS alert or a quick phone call. It can be annoying when there is no real threat, but it also protects you from real fraud attempts. Most issuers give you the option of signing up for SMS or email alerts to notify you of suspicious activity on your account.

“I’m getting alerts on my credit card because I’ve been the victim of identity theft,” says Sokunbi. “Typically, I get a text message saying the transaction was declined and asking if I attempted this transaction, and I’ll say yes or no. “

In the event of a fraudulent purchase, all major credit card issuers accept no liability for fraud, which means you will not be responsible for unauthorized purchases made on your account. This is why it is generally safer to use your credit card for purchases than a debit card – banks often have a zero liability policy for money stolen directly from your checking account, but it can take much more time to recover.

3. An expired card

If you try to use an expired card to make a purchase, the card will be refused. The expiration date of a credit card is usually listed on the front or back of the card and shows the month and year.

Your card issuer will usually remind you when your card is approaching its expiration date and send you a new one before the old one expires. If you notice that your card is expiring soon, you may need to be proactive and contact your issuer.

4. You are traveling

If you’re traveling to a different state, city, or country, making purchases with your credit card may set off an alarm signal with your issuer. Banks and card issuers usually see transactions in different places over a short period of time as a sign that your card may have been stolen.

In response, your issuer can freeze your account and prevent any purchases from going through to protect your information. If this happens while you are traveling, you can call your transmitter to let them know the purchases are valid, but the best way to avoid confusion is to let your transmitter know in advance of your travel plans.

5. Missed payments

If you’ve fallen behind on your credit card payments, your issuer may restrict your ability to use the card. In this case, the best thing to do is to call the sender and explain your situation to them. They can give you a clear idea of ​​what you need to do to refresh the account.

Keep in mind that late or missed payments usually mean late fees – and potentially an APR penalty. If you’re missing payments because you’re going through financial hardship, talk to your issuer to see what your options are. You may be eligible for a modified payment plan that allows you to continue using the account while you catch up.

How to prevent your card from being refused

While there are many reasons why your card may be declined, many of them are preventable if you proactively manage your credit accounts. Sokunbi says it’s about paying attention to all your credit card activity and immediately contacting your issuer if there’s a problem or you see anything suspicious.

Here are some steps you can take to avoid a declined card in the future:

  • Stay below your credit limit: Avoid both a declined card and a blow to your credit score by making sure not to max out your card. Monitor your spending regularly so you don’t allow your balances to approach your credit limit.
  • Sign up for account alerts: Many issuers give you the option of signing up for text or email alerts that alert you to suspicious activity, so you can avoid using your card if fraud is attempted. You can also sign up to receive balance and expense notifications.
  • Pay your balance on time and in full each month: Adopting good credit habits will reduce the chances that your card will be declined for late payments or exceed the limit, and will help improve your credit score.
  • Pay attention to the expiration date of the card: Credit cards usually expire after a few years. If your card is about to expire, contact your issuer to replace it with a new card.
  • Inform your issuer of your travel plans in advance: A preemptive call to your transmitter will make it easier for you to make purchases while traveling, both within the United States and abroad.

Final result

You can’t guarantee that your card will never be declined, but there are ways to reduce the chances of this happening. Keep spending well under your credit limit, pay off your balance every month, and always let your issuer know about upcoming travel plans. The key is to take small steps to actively manage your card account and be proactive in communicating with your issuer.


Comments are closed.