Why Is My Credit Card Being Declined

Did your credit card transaction fail even though you were sure that you had enough money to make the purchase? It could be due to several reasons, ranging from security issues to technology glitches. Knowing why this happens will help you find a way to fix it quickly and prevent problems in the future.

Some of the common reasons for credit card transaction failure are:

1. Insufficient Funds

The most common reason why a credit card transaction fails is insufficient funds. Even if you are sure that you have a higher credit limit, it can happen when the purchase amount is more than the available credit limit. When your credit card is declined, you can easily find out whether your transaction exceeded the available credit limit by calling the customer care department of the card issuer. 

2. Bank Restrictions On Credit Card Transactions

Financial institutions set daily spending limits or block transactions in certain regions (such as out-of-country transactions) to protect cardholders from fraud. The bank may decline the payment if your purchase exceeds the limit or is flagged as suspicious. You may be the one who initiated the transaction, but the bank has full rights to decline the transaction if they suspect that it could be fraudulent. 

3. Card Denied Because Of Security Reasons

Banks keep track of any unusual transaction. If there were any unusual high-value purchases or transactions from foreign countries, some banks would block them automatically.

4. Expired Or Inactive Card

An expired credit card is one of the causes of a card getting declined, and most banks will deactivate such cards after some time for security. If you are using an old card, it might have been marked inactive by the bank. 

5. Wrong Card Details

Errors while entering card details, including the card number, CVV, or expiry date, will lead to non-approvals of transactions. Always double-check the information before making the purchase.

6. Technical Glitches With The Payment System

A credit card transaction usually fails because of technical errors occurring within the payment processor, the merchant system, or even the bank servers. You can try again after a few minutes to check whether the problem has been resolved.

7. Blocked International Transactions

International transactions must be enabled to use credit cards in a foreign country. Otherwise, it may be declined. In that case, you may need to call customer support or activate international spending through the banking app.

8. Enter The Wrong Pin Multiple Times

Generally, if you require PIN verification for the transaction, entering the wrong code repeatedly might result in temporarily suspending the card for security reasons.

If your credit card gets declined for any of the above reasons, you must immediately resolve the issue to complete the transaction. It is best to contact the card issuer for troubleshooting credit card decline issues.

Although these failures do not occur frequently, you can take precautionary measures to avoid getting your credit card declined. The following tips can be helpful for that: 

• Stay Updated About Your Balance: Knowing the current balance on your account would ensure your awareness of how much you can spend before buying items.

• Updating Your Contact Information: Banks notify credit card owners of suspicious activity through SMS or email. Keeping your contact details up to date ensures that you promptly get alerts in cases of suspected fraud and take action right away. 

• Enable Transaction Notifications: Real-time alerts ensure tracking of spending and immediate detection of unauthorised transactions. 

• Notify Your Bank about Travelling Abroad: If you're travelling abroad call and inform your bank beforehand to prevent card denied-to-security-reasons problems.

• Set Spending Limits According To Use: Some credit cards have options that allow users to set specific daily or transactional spending limits. Modifying these values according to actual patterns of expenditure will avoid accidental declines.

• Update Card Information: Monitor your credit card's expiry date and update details with online merchants to prevent failed auto payments.

While a single declined transaction does not directly influence one's credit score, frequent declines related to the credit card can affect creditworthiness in the long run. 

• Late Fees: A declined transaction can stop the payment of a scheduled bill, creating a missed payment, which can impact the credit score.

• High Credit Utilisation: Exceeding credit limit results in declined transactions. This indicates high utilisation and negatively affects the credit score. Credit utilisation is supposed to remain below 30% of the total limit.

• Frequent Declines May Raise Lender Concerns: Lenders may be hesitant upon seeing the customer's application for credit after frequently exceeding credit limits or triggering fraud alerts.

Monitoring your credit profile regularly will help you identify possible problems before they lead to credit card transaction failure. 

• Check Your Credit Report for Errors: Inaccurate information, unauthorised transactions, or incorrect balances may cause a bank to decline your card. Therefore, it is important to have periodic checks on your credit report. 

• Maintain a Healthy Credit Score: With a good credit score, you can improve your borrowing power and make it easy to carry out transactions. Paying bills regularly and managing debts contribute to a good credit score. 

• Set Auto-pay for Bills: To avoid declines due to forgotten or missed due dates, set up auto-pay for loans, rent, and utilities.