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Convenience and reliability are two of the biggest benefits of credit cards, as they make it easy to make purchases without carrying cash. That's why it can be a little unnerving when your credit card is declined and perhaps embarrassing if you happen to be at the checkout counter.
Your credit card could get declined for a variety of reasons, including an expired card, exceeding your credit limit or due to fraud prevention measures. Here's why your credit card could be rejected and what you can do to prevent it from happening.
Why Is My Credit Card Being Declined?
After a credit card decline, contact your issuer immediately to determine what is causing the issue. Chances are, the decline is due to one of the following reasons:
1. You've Reached Your Credit Limit
If you've made several purchases on your credit card recently, you might have 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.
Not exceeding your credit limit will not only help avoid the frustration of a credit card decline, but it'll also help your credit scores. That's because credit utilization—how much of your available credit you're using—accounts for 30% of your FICO® Score☉ , the scoring model used by 90% of top lenders. Aim to keep your credit utilization ratio below 30%, but the lower, the better. High credit score achievers tend to have a credit utilization rate in the single digits.
Learn more >> How to Calculate Credit Card Utilization
2. Your Purchase Was Flagged as Fraud
Because credit card fraud is the most common type of identity theft, according to the Federal Trade Commission, 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.
3. You Have a Large Pending Transaction
Companies such as rental car providers and hotels may put a hold on your credit 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 they'll do it, but it's worth a try.
- Ask the merchant beforehand about their hold policy and plan your purchase accordingly.
- Use a different payment method or postpone your purchase if the merchant imposes a long hold window.
4. You're Behind on Payments
Credit card issuers may restrict your credit card use until you pay back your outstanding balance. Cutting off your ability to make more purchases reduces their risk that you won't be able to repay a growing balance.
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 a modified payment plan to help you keep your account current. Late payments usually mean late fees, but your issuer may be willing to waive the late fee to help you get on track.
Once you're in a stable place, you can create a strategy for paying down your credit cards so your monthly payments are more manageable.
Learn more >> What's the Best Strategy to Pay Off Debt?
5. Your Credit Card Is Expired
Sometimes the reason for a credit card decline is as simple as an expired card. Usually, your credit card company will send you a new credit card before the current one expires. But if you've moved since you got your last card and haven't updated your address, your card issuer may have sent your new card to your old address.
It's also possible your card may have been lost in the mail or stolen. Contact your card issuer immediately if you haven't received a new card after your current one expires.
6. Your Credit Account Was Closed Without Your Knowledge
Credit card companies close accounts for a number of reasons, including:
- Overdue: Falling behind and not catching up on overdue payments can lead to account closure.
- Inactive accounts: If you haven't used a particular card in a while and you're not carrying a balance, that could be the reason for a closed account.
- Exceeding your credit limit: Consistently going over your credit limit may cause your creditor to shut down your account.
- Bad credit: Just as card issuers can raise your credit limit if your credit improves, then can also reduce your credit limit or even close your account if your credit score drops significantly.
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.
What to Do if Your Card Gets Declined
There are several reasons why your credit card can be declined, though that fact doesn't make it any less frustrating when it happens. Here's what you can do to resolve any issues that could be causing a transaction to decline and how you can reduce the odds it happens again.
1. Try the Transaction Again
Sometimes the reason your transaction didn't go through is because your card is old and worn. If it doesn't work after a couple of tries, you may need to use another card to complete the transaction.
Other times, incorrectly entered information causes transactions to fail online. Something as simple as a missed digit on your credit card number, expiration date or CVV security code can trigger a failed transaction. Double-checking the information on your payment form and making sure it matches your billing information may do the trick.
A declined card transaction might also stem from a problem on the merchant's end. If you tried using a card on the merchant's website and the transaction failed to go through, you might visit one of the merchant's brick-and-mortar stores to attempt the purchase.
2. Contact Your Card Issuer
Thankfully, a quick call to your card issuer may be all it takes to resolve an issue that causes your card to decline, such as:
- The card issuer suspects fraud. If the issuer suspects a transaction is fraudulent, they might decline it. You may be able resolve the issue quickly by contacting customer service to verify your identity and get the transaction approved.
- Your credit card is expired. If you forgot to activate your new card and are using the old one, the transaction will be declined. Call your issuer to activate your card and try the transaction again.
- Your card is maxed out. If your credit card balance exceeds your credit limit or a transaction you're trying to make pushes your account over the max, your card issuer will likely decline the transaction. Depending on your creditworthiness, you may be able to get a credit line increase over the phone or through your dashboard.
3. Address the Problem
If your card has been declined, you can take steps to resolve whatever issue caused it, including:
- Storing credit card information to prevent incorrectly entering it for an online purchase
- Asking the card issuer to reopen your closed account
- Making overdue payments
- Paying your balance in full every month
- Carrying at least two credit cards in case one of them is declined
How to Prevent Your Credit Card From Being Declined
If you want to avoid having your card declined when making a purchase, here are some actions you can take:
- Set up account alerts. Purchase alerts and due date reminders can help you stay on top of your account balance so you don't use too much of your available credit. Also consider enabling fraud alerts to help you spot potential identity theft.
- Schedule auto payments. Setting up autopay from your account dashboard can help to ensure you never miss a payment date. An even better option is to set up autopay for an amount larger than the minimum payment each month to pay down your balance faster.
- Pay off your credit card balance each month. Paying off your card each month could not only help avoid embarrassing encounters at the cash register but also help improve your credit scores and avoid paying interest.
- Keep your account contact information up to date. Always update your contact information whenever it changes so your card issuer can contact you when they detect potential fraud. If they can't contact you to verify the purchase, they could decline the transaction to protect you from fraud.
- Pay attention to messages from your card issuer. In addition to setting up account alerts, make sure to read and understand any letters you receive from your credit card company. You'll want to be in the loop when a new card is expected to hit your mailbox, your card issuer is discontinuing your credit card or another important message is sent.
Taking preventative steps can limit the risk of having your card declined, but it can still happen. Even with the most meticulous account management and fraud prevention, your issuer could make a mistake or block legitimate purchases to prevent potential fraud. But by proactively monitoring your account and credit, you can reduce your chances of being declined.
Does Having Your Credit Card Declined Hurt Your Credit?
No, having your credit card declined does not hurt your credit. However, the reasons why a credit card transaction gets declined, such as maxed-out credit limits or missed payments, could harm your credit score.
Actions That Can Hurt Your Credit
- Late or missing payments: Your lender could start declining transactions if you've missed one or more payments. A purchase denial is bad enough, but missing payments can also wreak havoc on your credit. That's because your payment history accounts for 35% of your FICO® Score and missed payments stay on your credit report for seven years.
- Going over your credit limit: Your credit card company could block your purchases if your account balance rises above your credit limit. That means your credit utilization rate is over 100%. Remember, lower balances have a more positive impact on your credit scores, so aim to keep yours as low as possible.
Monitor Your Credit to Avoid Having Your Credit Card Declined
Monitoring your credit can lower the likelihood of a credit card transaction being declined and protect your credit. That's because potential fraud is one of the main reasons your card issuer could block your transactions. Credit monitoring alerts may help you stay ahead of potential dangers that could lead to a purchase decline. Similarly, alerts can also help you stay on top of your payment due dates and notify you when you're approaching your limit.
Credit monitoring is free with Experian, and it can help you monitor your spending and track your FICO® Score. You'll receive customized alerts about new inquiries, account changes, potential identity fraud and more. You can also see what's impacting your credit and discover steps to improve your score.