Why Your Credit Card Was Declined and What to Do

It’s easy to take credit cards for granted. We swipe them in the checkout line of grocery stores, use them while online shopping, or even when paying bills over the phone. But what happens if you go to pay for something and your credit card gets declined?

A declined credit card can be a jarring experience, but it happens to lots of people for a variety of reasons, and not all of them involve a lack of funds.

» MORE: What is a credit card?

What does ‘declined’ mean when using a credit card?

When a credit card is declined it will result in a ‘declined’ message on the terminal while you are trying to make a purchase. If you’re shopping online, you may see a similar message saying that the purchase could not be completed. This experience can be embarrassing and stressful, especially if you don’t immediately have another way to pay for the purchase.

A declined credit card is not the same as a flagged credit card. When your credit card is flagged it means the issuer may have noticed suspicious activity on the account. Payments may be declined and your account may be frozen until you get in touch with the issuer to discuss the suspicious transaction and determine whether or not it is fraudulent.

Reasons your credit card might be declined

Credit cards can be declined for a number of reasons, sometimes through no fault of the cardholder.

You hit your credit limit

Credit cards have spending limits. Once you hit that maximum amount and have no more credit available your card will likely be declined.

It’s recommended that you try to keep your credit utilization ratio under 30% at any given time, so it’s important to always keep an eye on your credit card balance and how close you might be to your limit. If you find you are continually struggling to stay within 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.

You made an unusually large purchase

Sometimes a large purchase can be seen as suspicious, especially if you don’t normally make purchases about a certain dollar amount. Your issuer might then freeze your account and decline any further purchases until they’re able to get in touch with you.

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.

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 precaution meant to protect you, the cardholder, from credit card fraud. If you are going on a trip, contact your credit card provider ahead of time and inform them of your travel plans.

» SEE OUR PICKS: Best travel credit cards in Canada

Your card is expired

Expired credit cards will typically be declined. A new card should be mailed to you before the expiration date. If not, contact your provider to request a new card.

Your card hasn’t been activated

Your card may also be declined simply because it hasn’t been activated yet. When you get a new credit card in the mail, it isn’t immediately ready to use. You’ll need to call your issuer or register the card online to set up your pin and activate it.

You’re behind on payments

One missed or late payment won’t typically result in your credit card being declined, but if it’s a persistent problem, your issuer could place a hold on your card until you make a payment. To avoid missed payments, consider setting up payment-due reminder notifications, setting up credit card autoplay to settle your bill every month, or arranging for the bill to be paid automatically through credit card authorization.

What to do if your credit card is declined

1. Stay calm and get in touch with your credit card provider as soon as possible (a phone number should be listed on the back of the card).
2. If you have another payment method available, use that to complete whatever purchase may have been in progress.
3. Contact your credit card issuer and let them know your location and what were attempting to purchase when the card was declined.
4. Ask the issuer for specifics about what led to the decline, and how you can make it right to restore your purchasing power.
5. Delay future purchases until the issue with your card is resolved. Continuing to try to use a declined card could result in even bigger problems.

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