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This article was last updated Aug 30, 2018. Terms and conditions may have changed. For the most accurate information, please consult the issuer website.
You’re at a store shopping or out to dinner with friends and it happens — the card you submit for payment is declined. Why did it happen?
A February 2018 survey found that 12% of credit and debit card users had at least one card declined in the last year. The most common reason — nearly 40% of the time — credit cardholders were declined was because of a maxed-out card.
But sometimes it’s not quite that simple. There are other factors that could be out of your control that causes your credit card company to decline your transaction. We outline 10 reasons why your card could be declined and offer tips on how to avoid many of them in the future.
- Activation, please. When you get a new credit card, there’s a big sticker on the front telling you to call a number or go to a website to activate the card. Until you do that, the card will be declined if you try to use it.
- Suspicious purchases. Your credit company tracks how you use your card and establishes your spending patterns. If you’re a 48-year-old male who all of a sudden starts spending a lot on high-end women’s handbags, your company may see this as suspicious and decline the transaction.
- Expired card. You’ve been busy and may not have noticed that your card expired. Your company didn’t automatically send you a new one or you missed it in your pile of mail. You have until the end of the month of your expiration date to use a card. After that, your transactions will be declined.
- Falling behind. Life happens and sometimes you miss making your credit card payments. If you miss too many, your account becomes delinquent. When you try and use it, the card may be declined.
- Wrong number. Some credit cards ask for pin numbers or zip codes before they approve a transaction. If you put in the wrong number, your card could be declined.
- Out of town — or the country. You decide to take a trip out of town or even outside the U.S. Once you arrive at your destination, you try to use the card to pay for things like hotels, meals and souvenirs. Your credit company may see this as suspicious and decline further purchases until it can confirm it’s you.
- On hold. You may have booked a hotel or rented a car where that company blocks funds to cover the cost, plus incidentals. For example, credit card holds are standard practice at most Starwood Hotels & Resorts locations. That includes the price of a hotel stay, any related taxes and miscellaneous fees, plus a deposit for incidental purchases. These holds are separate from your billed charges but may be added to your charges. After you’ve paid for your stay, that hold is released and it will be lifted between five and 14 days after you check out, depending on your credit card company. Or when you go to Hertz Rent A Car, it will put an authorization hold on the credit card you use to cover the estimated rental charges and any additional charges that may have incurred. It may also place an authorization amount of up to $200 on your card, and warns that these funds will not be available for your use. If these amounts exceed your card’s limit or raise other red flags on this list, this may be a reason for a decline.
- Too much spending. Some cards have a daily limit on how much you can spend. If you go over that limit, your card may be declined.
- Lowered limit. Your card company may decide to proactively lower your credit limit, but you may have missed the notice in your snail mail or email account. If your limit is lowered, it means your card will be declined if you go over that new amount.
- Big buy. You go to a big-box store and decide to splurge on a 65-inch Samsung HD television with a Bose Acoustimass home theater speaker system. This adds up more than $4,000 before taxes. That’s a big hit on your credit card and your company will probably decline it until it can determine it’s a legitimate purchase.
Ways to avoid being declined
With most of the examples above, there are simple steps you can take to ensure that your card is in order so that it won’t be declined when you try to use it.
Activate your card. It takes less than a minute to activate your card, either online or via an automated system.
Alert me. Ask your credit card company to send you alerts via text or email or even call you whenever they suspect suspicious behavior so you can take care of it quickly.
Check your card. Look at your card’s expiration date. If you haven’t received a new card by about a week before it expires, give the credit card company a call and ask for a replacement.
Pick up the phone. If you’re going to be traveling, especially out of the country, call your credit card company and let them know. If you’re about to make a big purchase and you know you have the credit to cover it, give your company a call to let them know you’re about to swipe your card.
What’s the policy? Check with hotels and rental car companies beforehand to see what their credit card hold policies are. This gives you the information you need to make sure your card isn’t frozen when you need it most.
Read your statements. You need to do this every month to check for things like credit score changes, suspicious purchases or changes in your credit limit (up or down). Also, be sure you’re at least making your minimum monthly payments on time — and, ideally, paying your balance in full.