We all face a dilemma sometimes when our credit card declined in the middle of a transaction. This could be an embarrassing situation if you are using your credit card to purchase a service. Imagine having a great lunch at a restaurant and putting in your credit card for payment. The server informing that your credit card declined to pay.
A credit card may decline due to a number of reasons. In order to, avoid the heartache of handing over a credit card and facing a declined card, we recommend checking a few things beforehand. It’s always good to enable notifications from credit card providers. Also, enable the notification service from your mobile or cell phone to get a notification alert.
Credit cards may decline to pay in case of using an expired card, foreign transactions, large payments, and some cases incorrect data input.
Balance exhausted or Credit limit reached
The most common reason for a credit card to decline is overspending or shooting the credit limit. Every credit card comes with a credit limit, which is pre-set by the bank. Further, this credit limit defines how much a user can shop or use the card for a purchase. If a user hits the limit on his credit card. Consequently, if they try to purchase or use a credit card beyond this limit, the transaction will fail.
Do not spend too much money or have a large outstanding balance on the credit card. Always, keep your balance under the defined credit limit. If you need help managing credit card debt, do read our best tips to manage credit card debt.
Sometimes, you might have put an automatic payment like a utility bill or tax payment on your credit card. If that transaction hits your credit card, it may take 2-3 days to appear in the credit card summary. The credit limit immediately reduces to factor in the impending transaction. Further, if you hit the limit of the card and try to make any transaction the same may be declined.
Otherwise, if you have made a payment on a credit card to restore your balance, give at least 2-3 business days for the amount to settle in the credit card. Don’t expect that the balance will be immediately restored. Consequently, the balance of a credit card is increased only after making a payment.
The Credit card is expired leading to the card declined
Every credit card comes with an expiry date on the front of the card. Sometimes we might miss that a credit card has expired and may try to use it. An expired credit card will be declined.
Additionally, banks and credit card companies cancel expired cards. As the same is no longer valid in their systems, holding an expired credit card is like holding a piece of plastic.
Using credit cards outside the USA
New credit cards disable the option of foreign transactions by default. Before you can use a credit card for a foreign transaction, you have to enable the same. You can enable foreign transactions from the website or the mobile app of the bank. Alternatively, you can reach them over call to enable the same.
Secured credit cards or basic credit cards are not available for foreign transactions. These cards do not allow foreign transactions at all.
Card declined on making an unusually large purchase
Credit cards may decline a usually large purchase on your credit card. They may suspect a large sum on your credit card is a fraud or theft transaction and may decline the same.
Say you have a credit card with a $5,000 limit. Usually, you make small transactions (under $500) with this credit card. You did a large purchase of day $4,000 on your credit card. This unusually large transaction may flag off risk systems. The bank may decline this transaction.
The Credit card is not in use for a long time
If you are not a frequent credit card user or if you have multiple cards, you may not use a particular card for long. In such a case, the credit card company or the bank may restrict transactions on the bank. This is to prevent unauthorized use of the credit card.
If the bank has disabled the credit card, the easiest way is to call the bank or reach through other channels to activate the credit card.
Entering incorrect credit card details in case of an online transaction
Always check twice before hitting the Pay button in an online transaction. It’s very easy to fill in the credit card details incorrectly in the payment details while shopping online. Especially, if you are using a mobile device to make a payment, say on amazon.com or an airline website the credit card declined may be due to entering incorrect details more often.
Some credit cards have dual-factor authentication, wherein you may have to enter an OTP (or a one-time password). This OTP may be in a form of a numeric code sent to a cell phone or an email id. Always, double-check the details as well as the OTP.
Things to keep in mind to prevent the credit card declined
We all can be a little proactive and keep a close tab on our credit cards. This would help us navigate any payment trouble or card declined scenarios.
Keep a sufficient balance on the credit card
Always keep a sufficient balance or credit limit on your credit card. It is also a best practice to maintain a good credit score to keep the overall credit utilization ratio below 30%. Read more to know about some of the other factors which help to keep a good credit score.
If you are fully utilizing your credit card limits every month, it would be difficult to keep track and you may face a transaction decline due to credit limit.
Opt-in for notifications services for your credit card transactions. Credit card companies provide an option to send you reminders if you are hitting your credit limit or max allowed balance.
Manage your credit limit to keep your balance below the same
Do not overshoot the credit limit of your credit card. Ideally, keep the credit utilization ratio below 30%. This will help keep the credit score of the user healthy. High utilization of credit cards may put a dent in the credit score.
Also if you are making a usually large purchase on your credit cards, do inform the bank or card issuer beforehand. They will honor a valid transaction if it is within your credit limit. In case, you fear that you may shoot the limit. Do call them and request credit limit enhancement. Alternatively, make a part payment to restore your credit limit or balance.
Although, credit cards do allow increasing the credit limit temporarily. Enquire from your bank for the facility of over-the-credit limit access. Though, you may have to pay a one-time fee ranging from $35 – $49 to enhance this limit. Although, this credit limit does not get added to your overall credit limit. Your credit card will restore the original credit limit as soon as you pay off the bills.
Check beforehand doing international transactions
Enable foreign currency or international transactions before using your card internationally. Also if you have to make payments in foreign currency online, ensure that international transactions are available.
Customers can enable the foreign transaction from the issuer’s website or mobile app. Alternatively, they can also call the issuer bank for enabling foreign currency transactions.
Keep a note of the last date or expiry date of the card
Always note the credit card’s expiry date. Credit card companies or issuing banks will reach out to you before the card’s expiry date. Ensure that your contact details such as email address, home address, and mobile phone numbers are up to date. Normally, they will reach you through the number or email registered with them. If any is changed, do update them with the bank.
If you are not using a credit card. Another good practice is to cut the older physical credit cards. Cancel the older credit cards with the issuers.
Keep using your credit card
If you have lots of credit cards, keep rotating the cards and use other cards. Normally, people keep one primary credit card for transactions and one secondary credit card as backup.
A good practice is to cancel cards not used frequently. Additional credit cards do not add any value but may affect your overall credit score. To know the best practices to build a credit score.