It's the stuff of nightmares. In movies, it signifies a character has hit a low ebb, and in the real world, it can cause frustration, panic and embarrassment - so why are credit cards declined?
If it's happened to you, it won't be much consolation, but be assured, it can happen to anyone. And, there are numerous reasons it happens, most of them bear no disgrace on the cardholder whatsoever.
The most common reason for having a credit card declined is an overzealous fraud prevention system.
Credit card fraud is a costly business. As such, the payment processors (American Express, MasterCard, Visa, etc.) spend a great deal on preventing it at the source.
To do this, they use complex models and algorithms to identify contextually unusual behaviour. In practical terms, this means that small purchases from traders local to you are likely to be processed without a problem, but unusual retailers or locations (especially international) are liable to ring alarm bells.
This doesn't mean that all untypical purchases are flagged for concern. Credit card issuers and processors have massive amounts of aggregated data from millions of customer transactions. Using this they can identify which infrequent transactions are likely to be bogus, and those that might be individually unusual, but are commonplace in an entire population. In this way, a £100 sale at an M1 service station would seem entirely standard, even if you've never used it before in your life.
Certain categories of high-end purchases are also susceptible to increased vigilance. These are categories that processors have learned the hard way that criminals favour, such as electronics, jewellery, or luxury watches.
Online credit card fraud has been a boon for criminals over the past few years. To combat the problem, payment processors have added additional security measures and safeguards for using credit cards online.
These safeguards typically involve the purchaser completing personal information that is not accessible from the card. Date-of-birth, home address, and email address, are all data elements commonly requested before an online transaction completes.
If one of these items has been mistyped or does not match the record held by the bank, the payment will not proceed. People who have moved house, but failed to notify their bank promptly are especially susceptible to having their card declined in this situation. If this happens to you, do not continue to try to re-enter information as this could result in your card being blocked, and your account being frozen. Instead, call your bank, and verify the data they hold.
Credit limit reached
A 'credit limit' is what it says it is. If you have reached your credit limit, you will not be able to spend any more on your card. That is until you have cleared some of your balance. Equally, if you are attempting to make a purchase that will take you above your limit, it is likely to be blocked. Even if it isn't blocked, you are likely to incur charges for breaching your limit so it is unwise ever to do this.
Account in arrears
If you have missed a payment to your card issuer, then they may have suspended your account. Different card issuers approach this in a variety of ways, but if you have had a poor track record for payment, your card issuer is unlikely to enable you to increase their financial exposure.
Ensure you always pay your minimum payment in full and on time to avoid this issue.
Yes of course, you will know if you cancelled your card, and you wouldn't expect the card to work if you had cancelled it, but depending on your financial arrangements your card might have been cancelled by someone else if the main account is in their name.
Individual parties who are in the process of a divorce for example, often cancel additional cards held on their account to avoid the other person running up debts for which they would be responsible.
In some cases, you will have done nothing yourself to cause your card to be declined.
Credit card security systems are working around the clock to prevent fraud, and if they spot something out of the ordinary they may freeze your account. If, for instance, a criminal has acquired your card details and they use them, even if your card issuer has prevented the transactions, they may freeze your account to prevent further malicious use.
What to do when your credit card declines
If your credit card declines, you may find that your card issuer gets in touch with you. If they don't, then the first thing you should do is contact them. They have full visibility of each and every transaction on your account, and will know exactly why you were declined.
Find your card issuers phone number on the reverse of your credit card, or use our list of card issuer telephone numbers found here.
Steps to stop your card being declined
Although there's little you can do to prevent your card being declined all eventualities, there are steps you can take to mitigate against some decline situations.
Good account management
Perhaps the easiest way to prevent your card being declined is with good account management.
- Keep your account well within your credit limit
- Make your minimum payments on time and in full
You should also be wary of using your credit card online. If you have found a bargain at a particular store, do some research to find out more about them. If other customers have had issues with a retailer, they are likely to have posted about it, and this can save you a lot of time and bother.
Notify your card issuer
If you know you are expecting to be making an important and unusual purchase, call your card issuer to notify them in advance. It takes a few minutes and can prevent an embarrassing situation, like being declined when you're in the middle of buying a romantic gift for a loved one.
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