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About 40 Million Americans Had a Credit Card Declined in The Past Year

About 40 Million Americans Had a Credit Card Declined in The Past Year

*Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any credit card issuer. This site may be compensated through a credit card issuer partnership.

This article was last updated Jul 18, 2019. Terms and conditions may have changed. For the most accurate information, please consult the issuer website.

Was your credit card declined in the past year? If so, you’ve got plenty of company. More than 1 in 5 consumers (22%) say it happened to them at least once in the past 12 months. While most people associate getting declined with being in a bad credit situation — and an embarrassing one at that — in many cases, it could happen through no fault of your own.

Here are some of the key findings in CompareCards.com’s recent survey on credit card declines to find out why, to whom, and how often it happens.

Key findings

  • 71% felt embarrassed when their card was declined.
  • 46% say their card was declined just once over the past year. 35% say it happened twice, 15% said three times, 2% said four times and 1% said five or more times.
  • When asked why they think their card was declined, 32% thought they exceeded their credit limit; 29% cited fraud protection; 16% blamed technological errors: 16% said their card had expired; 14% missed a card payment; 8% said a gas station or hotel put a hold on their account; 7% said an international purchase was declined; and 12% said they weren’t sure or gave another reason.
  • In-store purchases were slightly more likely to result in a card decline than online purchases: 57% say their credit card was declined in-store and 50% said it was declined when making an online purchase. 5% say it was declined somewhere else.
  • To resolve the situation, 45% paid with a different card, while 30% paid with cash instead. 12% didn’t make the purchase, and 8% asked the card issuer for a credit line increase. 5% say they did something else.

Who is most likely to have their card declined?

Our survey also found that the younger you are, the more likely your credit card was declined. Among those whose credit cards were declined:

  • Gen Z: 51%
  • Millennial: 30%
  • Gen X: 23%
  • Baby boomer: 6%
  • Silent Generation: 4%

“It makes sense that younger folks would be more likely to have their card declined,” said CompareCards’ Chief Industry Analyst Matt Schulz. “Their credit limits are likely lower, so it’s easier to max out a card,” he said. And given that exceeding their credit limit (32%) was the most common reason survey respondents said was why they may have been declined, it makes sense.

Also worth noting, men were more likely than women to say their credit card was declined in the past year (27% vs. 17%).

Getting declined can be embarrassing, but most get over it

If you’ve ever been at the front of a long check-out line or at a restaurant with friends and had your card declined, you know how mortifying that experience can be, as 71% of respondents confirmed. Depending on the reason for the decline, a handful of consumers (29%) said the experience also caused them to feel more negatively about their card issuer or bank. 

“It can be shocking and embarrassing to have your card declined, but our survey shows that it generally doesn’t lead to any hard feelings against the bank,”

It could be because they felt like they were shamed or penalized for going through a rough patch, such as carrying a high balance or missing a payment. Or perhaps because they felt a technological error (cited by 16% of respondents) was the cause of getting declined, and therefore, they felt inconvenienced.

“It can be shocking and embarrassing to have your card declined, but our survey shows that it generally doesn’t lead to any hard feelings against the bank,” Schulz said.

In fact, 45% said their feelings about the credit card issuer or bank did not change, while 25% actually felt more positive. “That’s likely especially true when it comes to declines because of fraud protection,” noted Schulz; in fact, fraud protection was the second most likely reason cited for getting declined (29%).

“People understand that fraud is a big problem and that banks are being watchful, so an occasional delay here and there is largely going to roll off the consumer’s back,” Schulz added.

How to avoid having your credit card declined

Beyond the two primary reasons for getting declined (maxing out your card or because of suspected fraud), other reasons included having a missed payment (14%), a merchant putting a hold on the account (8%), or it happened trying to make an international purchase (7%). Another 12% of respondents said they either weren’t sure or gave another reason.

What’s more, although most respondents (46%) say their card was declined just once over the past year, 35% say it happened twice, 15% said three times, 2% said four times and 1% said five or more times. If you’re among the segment of consumers whose card has been declined multiple times or because of factors within your control, with a few behavior changes, you can reduce the chances of it happening to you again in the future. Here’s how:

Keep your card balance well below your credit limit. Not only is keeping a low balance a good way to curb debt and avoid getting declined, it’s also important for your overall credit health as credit utilization (the percentage of your balance compared to your credit limit) accounts for 30% of your credit score.

“If you’re regularly bumping up against your credit limit, it’s important that you take action. Consider a 0% balance transfer card,” Schulz advised. If you don’t want to or can’t transfer your balance, focus on tackling your existing debt by finding ways to put extra money toward your payments. “These little steps may not change your life, but added all up, they can make a difference,” he added.

Carry a backup card. Getting declined can be annoying, but if you have another credit card on hand to pay, you can easily resolve the situation, as 45% of respondents said that they used another card in their wallet to pay.

Inform your card issuer before you travel. Card issuers are always on the lookout for unusual activity, so if you’re in a faraway place making a purchase, your card may be flagged. Taking the time to call your issuer to let them know in advance that you’re heading out of town can help avoid awkward encounters during your trip.

Be aware of your card’s expiration date. With 16% of card users blaming an expired card as the reason for getting declined, it’s worth keeping tabs on your cards. If this is the year yours expires, contact your issuer to ask when you should expect a replacement card.

Set up auto pay. Late payments may why some issuers put a block on your ability to swipe. By setting up automatic payments for at least the minimum amount owed, you can ensure you never miss a due date.

Pay with cash instead. If you think you run the risk of your card being declined, it might be a good idea to carry some backup cash. Whipping out their wallets was how 30% of survey respondents said they handled getting declined.

The bottom line

Having a credit card declined happens to many people at one time or another, and for a variety of reasons. To lower the odds that you’ll face that scenario, keep your account balance in check, pay bills on time and stay in touch with your issuer regarding travel or your card’s expiration date. And always have a back-up payment method… just in case.

Methodology 

CompareCards by LendingTree commissioned Qualtrics to conduct an online survey of 1,046 American credit cardholders, with the sample base proportioned to represent the general population. The survey was fielded June 10-11, 2019, and the margin for error for all respondents is +/- 3%.


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