10 Common Reasons Your Credit Card Was Rejected

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You’ve spent months scouring the Internet for the perfect washer and dryer combo to complement your newly renovated laundry room. Finally, you’ve located what appears to be the perfect match at the right price.

Suddenly the deal is off. Your credit card won’t go through, and you have no other immediate form of payment to use before the sale ends.

It’s happened to many of us: You go to close the sale or pay for a meal and are told: “This card’s been denied. Do you have another form of payment?”

Don’t think that this is always a result of sheer financial irresponsibility.

Here are factors that could trigger a credit card rejection, along with tips to remedy the problem.

1. Your card is maxed out

Going over the limit can have negative consequences, both in the form of fees and denials.

And it can also damage your credit because of the utilization factor, which accounts for 30 percent of your FICO score.

If you’re close to the limit, you can try to request an increase. But don’t use that as an excuse to go on a shopping spree and increase the height of your debt mountain.

2. Fraudulent purchases

Whether suspected or reported, they both prompt freezes. They could also result in the closure of the current account, followed by the issuance of a new card. To get to the bottom of it, promptly contact your credit card issuer to validate the purchases.

3. Authorized user dropped from the account

If you are an authorized user on a credit card account, and the person whose name is on the card revokes your rights or completely pulls the plug, you’ll be cut off. You can also lose temporary access if the card has been reported as lost or stolen.

To avoid being caught off guard, simply request that the lines of communication remain open at all times.

4. Transactions holds

Some transactions, such as lodging, rental car or other travel reservations, could mandate a hold be placed on your account. Assuming you are cutting it close to the limit, your credit card could be rejected at a point of sale until you’ve paid the final bill and the holds are lifted.

To avoid running this risk, keep your balances low to maintain a large amount of available credit and also strengthen your credit utilization ratio.

From our Solutions Center: Find a better credit card in seconds

5. Foreign/international transactions

Foreign transactions can raise credit card companies’ suspicions about fraudulent purchases. In fact, it doesn’t matter if you’re in another country or here in the U.S. and making a foreign purchase online.

The solution? Let your credit card company know before you travel far from home, including when and where you’ll be. And you should always alert them in advance about foreign transactions conducted online from the comforts of your own home.

6. Unusual purchases

If you make a purchase that seems odd based on your prior behavior, it may be flagged by the credit card company.

Two years ago during Black Friday, I headed to Saks Fifth Avenue in search of some goods that were steeply reduced. My purchases came to $458. The card was quickly denied. (Luckily, I had another form of payment on hand to reduce the extreme level of embarrassment that was clearly evident on my face).

When I called the bank, they released the hold but told me that because I usually don’t shop at “high-end” stores, they figured my credit card information had been stolen.

So, if you’re shopping at a different type of store or making an usually large purchase, my suggestion to you is to always have a backup way to pay and to warn your credit card issuer about your plans before you head out.

“Credit card issuers lose millions to fraud every year, so they’re very sensitive when your spending pattern changes,” John Ulzheimer, president of consumer education at SmartCredit.com, told Bankrate. “They just want to be sure it’s a legitimate charge.”

7. Delinquent accounts

Ignore the balance due long enough and the magic plastic may suddenly lose all of its powers; it just depends on the issuer and your history with the company.

Other negative consequences that may result include:

  • Damage to your FICO score once the activity is reported to the credit bureaus.
  • Lower credit limits if the issuer views you as a greater risk than before.
  • Fees for late payments.
  • A higher interest rate.

To avoid the risk of delinquency, set up payment reminders. If money is tight, reach out to the creditor to see if payment arrangements can be made, or if any additional remedies are available to you.

8. You’re past the expiration date

If you didn’t get a new card in the mail before your card’s expiration date, they may not want you as a customer anymore. But don’t just ignore it: You could be a victim of mail fraud.

You should call the company to make sure the card wasn’t stolen or that you didn’t mistake the new card for a piece of junk mail and toss it in the trash.

9. Transposed numbers

Sometimes you’re asked to provide a ZIP code or the security code on the back of the card to confirm your identity at the point of sale. Mix up any of the digits and a rejection will follow. You can always retry, but enough errors will prompt a lockout until you’ve contacted the card company.

Be careful when you enter those numbers. You want to get them right the first time around.

10. A closed account

The credit card company can close your account for all sorts of reasons, and doesn’t have to give you advance notice. CreditCards.com said:

Even if you’re not in default, an issuer can boot you at any time. The most common reason is that you’re not using the account often enough.

You can’t prevent all of them, but it’s a good bet that your card company will keep you if you use the card regularly and responsibly and always pay your bills on time.

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  • Di Mars

    This happened to me when I tried to purchase two appliances. It was not only embarrassing but I missed the chance to get the cash back bonus the first card offers on purchases. Upon arriving home I called the issuer of the rejected card and was told that the rejection was probably because of the unusual amount of the purchase and that if it should happen again to call the card company while in the store so that the purchase can be approved. The company also added the amount that I would have earned in cash back to my bonus account so it turned out in my favor. It always pays to complain about a genuine problem!

  • bigpinch

    You don’t have travel out of the country and buy things to find your card suddenly declined. When my mom, living in another state, got sick, I suddenly found myself using my primary credit card to pay for everything and just as suddenly found the card declined. Well, I used another credit card, so no big deal. When I called customer service of my primary card, they explained that the sudden change looked suspicious. Since traveling out of town to help my mother has become a regular feature of my life, I’ve learned to notify my card company in advance about my itinerary and it hasn’t been a problem since.

  • http://ecofrugality.blogspot.com/ Amy Livingston

    Bigpinch, the same thing happened to me once: my credit card was rejected because I tried to use it in Indiana while visiting my in-laws. I had to call the company and explain that I was indeed in Indiana to get them to unfreeze (thaw?) the card. What’s funny about this is that my husband I had used that same card to purchase gas, twice, on our way from New Jersey to Indiana, and apparently that didn’t tip the company off that we were actually headed out that way.

    Anyway, I now routinely call the company before we go anywhere to let them know that yes, charges made from another state during this time period are legitimate.