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Credit cards have become an important part of most Canadian’s daily lives, with seven out of 10 Canadian adults using one to pay for essential purchases, according to the 2023 Canadian Consumer Credit Card Report from NerdWallet. If you’re a credit cardholder, you might rely on your card to check out at the grocery store, shop online or even pay bills over the phone. But what happens when that little plastic wonder suddenly gets declined?
A declined credit card can be a jarring experience, but it happens to a lot of people for a variety of reasons, and not all of them involve a lack of funds.
Why is my credit card being declined?
Credit cards can be declined for a number of reasons, sometimes through no fault of the cardholder. Here are six main reasons you might see a declined message when trying to make a transaction.
1. You hit your credit limit
Credit cards typically have credit limits; this is the amount of money you’re allowed to charge to the card. Once you hit the maximum amount and have no more credit available, your card will likely be declined.
Keep in mind, too, that pending payments that haven’t hit your account can make it appear that you have more credit available than you do.
If you continually struggle to stay under your credit limit, you could: take a look at your spending habits and set a budget, try to make more frequent payments, or contact your credit card provider about increasing your limit.
Nerdy tip
It’s recommended that you keep your average credit utilization ratio under 30% across all cards and lines of credit. For example, if you have two credit cards, each with a credit limit of $6,000, you should aim to have a combined credit card balance of no more than $3,600.
2. You made an unusually large purchase
Sometimes large purchases can be seen as suspicious, especially if you don’t make them regularly. If this happens, the issuers might flag the card and freeze its activity. Payments may be declined and your account frozen until you contact the issuer and determine whether or not the purchase was fraudulent.
If you have an abnormally large purchase coming up, it might be a good idea to give your credit card issuer advance notice. They will make a note on your account so you won’t need to worry about having your credit card declined.
3. Your card is expired
Expired credit cards are typically declined as they are no longer valid forms of payment. Issuers often mail you a new card before the expiration date to avoid disruptions to your payment activity. If you didn’t receive a new card, contact your provider to request a new one.
4. Your card hasn’t been activated
When you get a new credit card in the mail, you need to activate it before you can use it. To do so, call your issuer or register the card online.
5. You used your card while travelling
Using your credit card in a foreign country or even in a different city can result in a declined credit card. This is a security measure to protect you, the cardholder, from credit card fraud. Most issuers don’t require you to inform them of travel, but if you want to be extra cautious, you can contact them ahead of time and inform them of your travel plans.
Nerdy tip
Some travel credit cards don’t charge foreign transaction fees, which can be a nice perk if you travel internationally on a regular basis.
6. You’re behind on payments
Late payments can cause a credit card to be declined. Issuers will typically place a hold on your card until you make a payment on the balance. Once the payments are made, the hold is lifted.
To avoid missed payments, consider setting up reminder notifications or automatic credit card payments through the issuer.
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What to do if your credit card is declined
If your card is declined, you’ll need to cancel the transaction or use a different payment method. Then, as soon as you’re able, follow the steps below:
- Get in touch with your credit card provider (a customer service phone number should be listed on the back of the card).
- Let the issuer know your location and what you were attempting to purchase when the card was declined.
- Ask the representative you speak with for specifics about what led to the decline and how you can make it right to restore your purchasing power.
- Delay future purchases until the issue with your card is resolved. Continuing to use a declined card may exacerbate the issue.
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