Why Is My Credit Card Being Declined?

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Having your credit card declined can be frustrating, embarrassing and a little bewildering. When it happens, ideally you'll have a debit card or backup credit card to finish checking out. But once you're out of the store, it's a good idea to find out why your card didn't go through. The quickest way to do so is to contact your card issuer immediately.

Your credit card could get declined for a variety of reasons, including an expired card, exceeding your credit limit or fraud prevention. Here's why your card may be getting rejected—and what you can do to prevent it from happening again.

1. You've Reached Your Credit Limit

If you've made several purchases on your credit card recently, you might have inadvertently maxed out your card. Some credit card companies give you a little leeway and will approve an over-the-limit charge so you're not declined in the store. However, they may charge a fee for the overage.

The risk of exceeding your credit limit is higher if you have a low credit card limit—say, a few hundred dollars. If that's the case, you may want to use the card for smaller purchases, such as your morning Starbucks fix or a streaming service subscription. That way, it'll be easier for you to pay off the balance each month and avoid hitting your credit limit.

There's another important reason to avoid maxing out your credit card: It'll help your credit scores. Credit utilization—how much of your available credit you're using—plays a significant role in your credit scores. Keeping your individual credit card balances, and your total credit card usage, under 30% of your available limit will keep your utilization low, which can help your credit. Once your balances push your utilization over 30%, your credit scores can suffer.

2. Your Purchase Was Flagged as Fraud

Because credit card fraud is the most common type of identity theft, card issuers are constantly on the lookout for suspicious activity. While a legitimate purchase being flagged as potential fraud can be annoying in the moment, it can ultimately protect you. Identity theft could result in someone stealing and selling your personal information or running up significant charges on your card.

When your card is declined and you know you have plenty of available credit, call the phone number on the back of the card. A representative should be able to lift any freezes the issuer put in place.

In years past, it was a wise practice to contact your card issuer before traveling abroad to avoid triggering a suspicious activity decline. However, card issuers have become much savvier at detecting fraud, and it's usually unnecessary to inform them of your travel plans. Still, ensure the contact information for your account is current in case your card issuer needs to notify you and request a purchase verification in real time.

3. You Have a Large Pending Transaction

Companies such as rental car providers and hotels may put a hold on your card to ensure you have enough available credit to pay your final bill. While the hold is in place, your card issuer might decline other purchases until it's cleared.

If you need access to the credit line sooner, you can call the credit card issuer or the merchant to request that they lift the hold. There's no guarantee that they'll do it, but it's worth a try.

Before making the purchase, ask the merchant about their hold policy and plan your purchase accordingly. If the merchant imposes a long hold window, you can use a different payment method or postpone your purchase if necessary.

Your best bet is to build transaction holds into your budget. If you know you'll be renting a car or checking into a hotel for a week, you can set aside some extra savings in your checking account or make sure another card has plenty of credit so you're not worried about getting declined.

4. You're Behind on Payments

Credit card issuers can restrict your card use if you haven't made a payment recently. By restricting your purchases, your card issuer reduces the risk of losing additional unpaid charges if you can't pay back what you owe.

If you're going through financial hardship, the best thing to do is call the issuer and explain your situation. They may waive a minimum payment or offer you a modified payment plan to help you bring your account current. Late payments usually mean late fees, but your issuer may be willing to waive the fee to help you get on track.

Once you're in a stable place, you may want to create a strategy for paying down your credit cards so your monthly payments are more manageable. There are a number of ways to pay off debt, including debt consolidation loans, transferring your balance to a lower-interest card or working with a credit counselor to negotiate more affordable terms.

5. Your Credit Card Is Expired

Your credit card company will likely send you a new credit card before your current one expires. However, if you moved and forgot to update your address or accidentally continued using your old card, you may get declined.

The card may also have been lost in the mail or stolen, so if the expiration date passes and you haven't received a new card, contact your issuer. Always keep your contact information current to prevent getting declined over an expired credit card.

6. Your Credit Account Was Closed Without Your Knowledge

Card companies close accounts for a number of reasons, including late payments or consistently exceeding your credit limit. And if your credit score has dropped significantly since you opened the account, they may close it or reduce your credit limit.

Card issuers also close inactive accounts, so if you haven't used a particular card in a while and you're not carrying a balance, that could be the problem. If you were an authorized user on someone else's account and the primary cardholder removed you from it, you'll no longer be able to use the card. In some cases, credit card companies make changes to their credit card lineup and discontinue a card.

The only way to know for sure why an account was closed is to contact the issuer. Unfortunately, issuers are not legally required to tell you that they've shut down your account, which is why it's good practice to log in and check the status of your accounts regularly.

How to Help Prevent Your Card From Getting Declined

You can take a few simple steps to help manage your credit card accounts and avoid getting declined when trying to make a purchase.

  • Sign up for account alerts. Many card issuers offer online and mobile app account management, and taking advantage of those options can help you keep your account in good standing. By setting up fraud alerts and purchase alerts, and checking your balance and transactions at least once a week, you can help prevent identity theft and avoid using too much of your available credit.
  • Use autopay. If your issuer has an autopay option, that may help you avoid late payments. You can schedule your monthly minimums to be withdrawn automatically so you don't have to remember to do it each time the bill comes, then make additional payments to pay down your balance when possible.
  • Pay off your balances each month. Paying off your card each month will not only help avoid embarrassing encounters at the cash register but also help improve your credit scores.
  • Keep account contact information up to date: If your card issuer suspects fraud, they must be able to send you a purchase verification. Otherwise, they may need to decline the purchase to prevent a potentially fraudulent transaction.
  • Pay attention to notices from your issuer. Keep an eye out for letters from your credit card company. They may give you a heads up that a new card is on the way or that your issuer is offering new security features to protect your account; implementing those could lower your chances of being a fraud victim.
  • Avoid setting off fraud alerts. Spending big on a new credit card or making several large purchases in a short period can trigger a fraud alert. Your card issuer may suspect someone opened an account in your name or suspect other fraudulent activity. Of course, you're entitled to use your card as you wish within the terms and conditions of your credit card agreement; however, your card issuer may block legitimate purchases if it suspects fraud.

There are no guarantees against your card being turned down. Even if you manage your account perfectly, your issuer might make a mistake or block legitimate purchases in an attempt to prevent fraud. But by proactively monitoring your account and your credit, you can reduce your chances of being declined.

Does Having Your Credit Card Declined Hurt Your Credit?

No, having your credit card declined doesn't harm your credit. However, the underlying reasons for the decline could negatively impact your credit score.

For example, a missed payment is one of the most common reasons for a purchase denial. Even worse than the embarrassment of a credit card decline is the negative impact a missing or late payment can have on your credit. Remember, your payment history accounts for 35% of your FICO® Score , the credit score used by 90% of top lenders. Late payments stay on your credit report for seven years.

Similarly, a creditor may decline a credit card purchase if your account balance exceeds your credit limit. In that case, your credit utilization on that card is over 100%. Aim for an overall credit utilization rate below 10% for best results.

Monitor Your Credit to Help Prevent a Credit Card Purchase Decline

Monitoring your credit can help you avoid having your credit card declined while protecting your credit. For example, credit monitoring can help you detect fraudulent activity or errors on your account that may trigger a decline at the register. Similarly, alerts can help you avoid late payments or charges over your limit.

Consider Experian's free credit monitoring service, which can help you keep track of your accounts and your overall credit. You'll receive real-time alerts about suspicious activity and changes to your credit report, along with notifications about balance decreases and credit utilization updates.