Why was my credit card declined?

Imagine visiting your favourite store and waiting at the checkout to purchase an item you have been dreaming of, only to have the cashier tell you that your credit card has been declined.

Apart from being an embarrassing encounter, it can also be a huge hassle if you don’t have an alternate payment method.

If you have been wondering why won't my credit card work online or offline and what can be done to prevent it from happening again? Here’s everything you need to know:

There are various reasons why your card is declined by card issuer. Here are some of the most common ones:

You have hit the credit limit

If you swipe your card but notice payments not going through, you may have exhausted your credit limit.

The credit card limit indicates the maximum amount you can spend. The limit is restored in proportion to the payment of credit card dues. Therefore, once you fully pay the bill by the due date, you enjoy the total limit available on your card. If you are running behind on your payments and have exhausted your card's limit, the issuer won’t honour any more transactions until you make payment.

It’s always recommended to keep the usage at 30 percent of the available limit for optimal credit utilisation. Maxing out your credit card impacts your credit score negatively, making you an unsuitable candidate for future borrowings.

Not sure what your current credit score is? Sign up with ClearScore to check credit score for free, anytime.

A large transaction is pending on your card

Are you wondering, ‘why is my card declining when I have money and credit card dues have been cleared on time?’

Having your card declined is common if your credit card has been put on “hold” for a significant amount of money by a merchant such as a hotel or a car rental company. This is done to ensure that there is adequate available credit to settle your final bill. Usually, the hold is released when you settle the final bill, and your credit card is charged.

However, till such time the hold is in place, the card issuer may decline other payments. Check with merchants how long it usually takes to release the hold. If you have an urgent payment pending, use alternate payment methods to avoid situations where your credit card is declined.

Your card is beyond the expiry date

Every credit card comes with an expiry date. Usually, the card issuer sends a fresh one before the current one expires. After expiry, your old credit card won’t work if you try to use it for offline or online transactions.

Get in touch with the card issuer a few months prior to the expiry date of your card, and make sure that they have your current mailing address on file. Even if the new card is sent well before the expiration date, you can activate it as soon as you receive it and destroy the old one.

If you don’t receive the new card within the expected time, let the issuer know to prevent anyone from misusing your card, which may get stolen during transit.

You have punched in the wrong details

Your credit card carries a lot of information that is crucial for a transaction to go through. For example, during an online transaction using a credit card, you need to enter your credit card number, expiry date, CVV number, and the cardholder's name on the merchant's payment portal. Similarly, you must punch in your confidential PIN when swiping the card offline.

Even a single omission can invalidate the transaction and result in your card getting declined. Always double-check every detail at the time of checkout.

Your card appears has been used for a fraudulent purchase

Every day, several cardholders across the globe fall prey to credit card fraud.

As a result, credit card companies are constantly on the lookout to detect suspicious credit card activity. If it appears that your card is being used from an unfamiliar location or there are multiple identical charges made to the card within a short span, the card issuer’s fraud detection software gets triggered.

While the card issuer suspecting a potential fraud when the card is used for a legitimate transaction can be annoying, it is for your safety, as undetected frauds ultimately put your personal information at risk. Anyone can use your card details to carry out unauthorised transactions.

Your credit card account has been shut down

If your credit score has been consistently low since the card was issued, you will get flagged as a high-risk borrower. In such cases, a credit card issuer can close your account to prevent you from borrowing more and posing more risk to the lender. Credit cards that have not been used for a long time can also be shut down due to inactivity.

Credit card companies may also close your account by mistake. Since they are not legally required to inform you of the reasons for shutting down your account, it is a good practice to log in regularly and check the status of your credit card account.

If you are an add-on cardholder or authorised user on someone else’s card, you may be prevented from using the card if the primary card is cancelled. For example, suppose the primary cardholder’s card is reported missing or stolen. In that case, the rights of all the users on the card are temporarily deactivated until a new card is issued.

The issuer may also cancel the card if the primary cardholder maxes out their credit limit or fails to pay credit card dues on time. Additionally, your card may be declined if the primary cardholder removes you as an authorised user.

You have several missed payments

If you miss a payment for the first time, the card issuer may not take any action apart from levying standard penalty as per the card agreement. However, if you have a history of missed payments, the lender may flag you as a high-risk borrower and refuse to honour transactions even if you are just a couple of days past the due date.

‘Credit card isn’t working’ is a nightmare everyone wants to avoid. Here’s a quick look at a few things you can do to avoid getting caught in such a situation:

Sign up for account alerts

Most credit card issuers allow you to sign up to receive news and alerts about your credit card. By signing up for these, you can stay on top of your credit card usage and get alerted about unauthorised or fraudulent transactions. Additionally, make it a habit to log on to your online credit card account at the end of every week to check the balance to prevent overutilising your credit limit.

Pay off your dues at the end of every month

Paying your credit card dues in full every month helps boost your credit score and prevents you from encountering embarrassing situations where your card suddenly stops working. Moreover, it increases your chances of qualifying for the best rewards card in the market and bagging competitive loan rates.

Make sure to set up alerts on your phone for the bill payment date so you never miss one.

Use autopay

If your card issuer supports autopay, activate it to avoid missing payments by the due date. You can also provide instructions for the minimum amount to be drawn every month for payment to avoid late payments. You can pay down the balance at a later date.

Keep your card issuer informed about your travel plans

Even though most credit cards are issued for international usage, some credit card companies may need you to tell them if you intend to use your card abroad.

Before you pack your bags and head to the destination, make sure to notify the card issuer to avoid wondering ‘why isn’t my card working?’. When the bank knows that you will be in London for a week, it is less likely to reject the transactions you make there using your card.

Even if you follow all the tips suggested above, you can still find yourself in a situation that leaves you wondering ‘why did my card get declined?’. In such cases, a call to your credit card issuer can quickly resolve the issue. But in any case, meticulously monitoring your credit card usage and account can minimise the chances of the card getting declined.