Why Your Credit Cards Could be Declined

Having your ever credit card declined just when you are about to make a credit card purchase can be one of the most infuriating problems.  Often, the credit card users believes there is plenty of available credit on the credit card and puzzled as well as embarrassed by the refusal of the merchant and the credit card company to accept the charge.  

If a credit card transaction is declined, the merchant could advise the customer the reason for the transaction being declined.  The customer, however, in a majority of the cases, is not informed about the cause for denial.  They are trying a legitimate transaction and are now simply confused as to why the credit card was declined.

Going over the credit card limit is one of the more common ways to have a credit card transaction declined.  When credit card delinquencies rise, credit card companies are much more conservative on how they handle credit card transactions that exceed the card holders established credit card limit.  Always make sure you know exactly how much credit you have available, and if you’re reaching your credit card limit it may be time to look at your credit card use and spending habits.  When your credit card debt rises, it’s time to sit back and avoid bigger debt and payment problems. 

Declined transactions on a credit card that indicate that you have exceeded your credit limit can also cause future credit problems.  Exceeding your credit limit will generally reduce your credit score.  A lower credit score will make it more difficult to obtain the best credit card rates in the future or obtain the best rates on other loans such as car loans or mortgage loans.

Late payments are also a common reason for credit cards being denied at a point of purchase.  Even if you have plenty of available credit on your credit card, if a credit card holder doesn’t make their monthly payment on time the credit card company may very well place a hold on the credit card that prevents further transactions.  Generally, the credit card payment has to be at least 30 days late however, this is not always the case.  A late payment allows the credit card company to stop further purchases and reduce the credit card limit as well as possibly raise the credit card interest rate.

Often the cause of a credit card transaction denial is the credit card company will deny the purchase if they think someone else is using your credit card or there is suspicious activity.  If you are making a lot of purchases, uncharacteristic of your normal spending habits, or if you just went out of town and used your credit card frequently for unusual purchases, this could flag the credit card company.  The credit card may restrict future credit card transactions until they confirm the card is not lost, stolen or other suspicious actions. 

These are measures that are designed to protect you against problems such as identity theft but it may present a problem until the credit card company can verify the activity with the cardholder.  An example that could trigger a freeze like this would be multiple jewelry purchases while on vacation or perhaps multiple purchases using the credit card online in a short period of time. 

To protect credit card companies and the account holders from fraudulent charges, most all of the bank credit cards have a limit on how many purchases or how much money can be charged on a credit card in a single day.  If you exceed this credit card limit, the credit card company may block your account from any further activity as a precaution and future credit card transactions could be declined.

If you plan on making several out-of-the ordinary purchases on a card, consider calling the issuer beforehand and letting them know.  So all it takes to rectify the situation is a quick call to the company and they should be able to unfreeze your credit immediately.

An expired credit card is a frequent cause of a transaction denial as well.  Many consumers are inundated with credit card mailings and ignore the credit card envelope that contains the new credit card to replace the expiring one.  It is fairly easy to accidentally skip over these renewal letter and notices and then not paying attention to when the credit card expires.

One final reason a credit card can be denied is because of a malfunction.  The credit card magnetic strip can be damaged and therefore not able to scanned or read which may cause the card to come back declined.  Again, having a back up credit card to use may be helpful to avoid the unnecessary consumption of time and inconvenience.

For responsible credit card users with good credit who keep up on their credit card payments, it can be a complete mystery as to what has caused the merchants system to report the transaction is declined.  By understanding the reasons cards come back declined it may be easier to get around these issues in the future.

Credit card denials can be very inconvenient and even embarrassing.  Credit card denials are not an infrequent occurrence and should not cause a lot of grief.  Stay current on your credit card payments and try to stay away from the credit card limit and then always have a back up credit card to complete the transaction.

Tags: bank credit cards, best credit card rates, credit, credit card, credit card company, credit card debt, credit card denials, credit card interest, credit card limit, credit card online, credit card payment, credit score, new credit card

This entry was posted on Thursday, June 25th, 2009 at 10:15 am and is filed under Credit Card Articles. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.