Having a credit card declined can be embarrassing and uncomfortable in a social sense — but also worrisome and unsettling if you're not sure of the reason behind the merchant’s rejection of your card. And if you use credit cards for day-to-day purchases, getting locked out can mean being unable to buy gas or groceries.
There are several reasons why a credit card may get declined, from simple human error to more serious issues such as fraudulent activity on your account. Here are some of the most common explanations:
1. You’ve reached your credit limit
One of the most straightforward reasons your card could have been declined is that you’ve hit the card's credit limit. The card company simply won’t let you borrow any more money until you’ve made a payment. Maxing out your credit card impedes your ability to make purchases, but it’s also bad news for your credit score. In general, it’s best not to exceed 30% of the available credit on each card, so if your credit card is maxed out, you’ve well exceeded that credit utilization guideline.
In order to be able to use your card again — and keep your credit score from cratering — you’ll need to make a payment on it, pronto.
2. Your card has expired
All credit cards have an expiration date, typically indicated by month and year on the card itself. If you're still trying to use an old, expired card for a transaction, it'll be declined.
“If you've recently changed addresses, make sure your issuer has your updated contact information; otherwise, you may never receive your new card.”
Your card issuer will alert you when you're approaching the expiration date and will also send you a new one before then. But if you've recently changed addresses, make sure your issuer has your updated contact information; otherwise, you may never receive your new card. Once you do get it, you'll need to activate it by phone or online and use it for all transactions going forward (after destroying the old one).
3. You made a typo
If you're purchasing something online, you'll need to supply the merchant with a multi-digit account number, an expiration date, a CVV number, a shipping address and a billing address. That's a lot of information, and a lot of opportunities to transpose or omit a number.
Double-check everything before smashing that final "buy" button.
4. A hotel or rental car company has put a 'hold' on your card
Hotels and rental car companies frequently place a "hold" for a certain amount of money on a customer’s credit card when the cardholder checks in or picks up a car. The purpose of the hold is to make sure the customer will have enough available credit when the final charges are calculated.
“The purpose of the hold is to make sure the customer will have enough available credit when the final charges are calculated.”
For example, if you order a bunch of room service or raid the in-room minibar while staying at a hotel, the hotel might need to tack an extra $100 onto your bill, beyond the regular charge for the stay. A rental car company, meanwhile, might want to charge you for gas if you bring the car back empty. So they tie up a portion of your credit line with a hold.
The hold should be released when your final bill is tallied and charged to your card. But until it is, you might have less available credit than you think, leading to a rejection.
5. There's been a suspicious purchase
Credit card companies have become savvy at recognizing fraudulent purchases made with your card; they’re often able to detect them even before you can. If your card appears to have been used far from your home or has been used to make multiple identical charges, that can trip the issuer's fraud triggers.
“Credit card companies occasionally flag legitimate charges as potentially fraudulent purchases and freeze the ability to use the card they think might be compromised.”
However, the net that issuers cast to catch credit criminals is very wide — sometimes too wide. Credit card companies occasionally flag legitimate charges as potentially fraudulent purchases and freeze the ability to use the card they think might be compromised. They think they’re stopping a thief, but in reality you’re bearing the brunt of their caution.
Such misunderstandings can usually be cleared up with a call to your credit card company to verify that your card has not been compromised.
» MORE: How to prevent credit card fraud
6. Your card has been exposed to a threat
Again, credit card companies have become very adept at picking up on potential identity theft. So if there’s a possibility that your card information was leaked or exposed, your card might be rendered temporarily unusable. If you’ve purchased something online at a site that wasn’t secure or used your card in a store that may have been the subject of a data breach, your issuer could take steps to keep your card from being used for unauthorized purchases — including freezing all activity.
If your card has been declined and you’re completely stumped as to why, get in touch with your credit card company — there’s a good chance they’re trying to protect you from a scam.