Why Is My Credit Card Being Declined?

It's frustrating to try to buy something – online or in-store – only to have your credit card declined. In many cases, the retailer can't offer an explanation of why your card didn't go through. So, what caused it to decline?

You might feel stressed, but it's a pretty common experience – and there are many reasons why it can happen. Read on to learn 7 reasons why your credit card might have declined, and how to fix it.

7 reasons your credit card declined

There are several possible reasons your transaction didn't go through. It might be a more serious reason, like hitting your credit limit, or a minor mistake, like entering the wrong card number when buying something online.

Here are the most common reasons your card gets declined:

1. You reached your card limit

What happened: You've hit your credit limit – the maximum amount you can charge to your card – and you can't make another purchase. Sometimes, the merchant will get an NSF or "insufficient funds" error code.

What to do: If you consistently spend more than your credit limit allows, the first step is to reevaluate your spending. See what you can cut out and set a budget. This process makes it easier to notice when you're spending on things you don't really need.

To prevent hitting your limit, you can also make payments more often. Once you've paid off part of (or all of) your balance, you'll have free space within your credit limit to start buying things again.

If you constantly run into this problem, you can ask your bank to increase your credit limit.

Pro tip: Always try to keep your credit utilization ratio below 30% across all of your credit products to prevent your credit score from taking a hit.

2. Your card is expired, or your new card isn't activated

What happened: If you have an expired credit card, it will be declined every time. Usually, your bank will mail you a new credit card a few weeks before your current card's expiration date. But if you don't activate it, you won't be able to make purchases.

What to do: Once your new card arrives, activate it by following the instructions enclosed. Activation typically involves going online or calling the bank's hotline by phone. Once you've confirmed that your new card is working, cut up your expired card to avoid potential fraud.

Pro tip: If you activate your new card by phone, you'll usually need to call from the number on your account.

3. You made a large or unusual purchase

What happened: If your credit card issuer detects a high-value purchase attempt, they may freeze your card – especially if a purchase that size is out of the ordinary – to stop potential fraudulent activity.

What to do: You'll need to speak to the bank's security department to confirm that the transactions are legitimate. They'll unfreeze your card, and you can begin using it again immediately.

Pro tip: If you or an additional cardholder will be making a large purchase, contact your credit card company beforehand to avoid any issues.

4. There's a hold on your card

What happened: Authorization holds use part of your available credit. If you have a hold on your card and try to make a purchase that goes over your limit, the card will decline.

Here are some common examples of when you might have a credit card authorization hold:

• Rental cars
• Hotel stays
• Buying gas

What to do: Holds typically "fall off" your card in 3 – 5 business days, but it could take longer. You don't need to do anything but wait. If you need to make a purchase at this time, you'll need to use a different payment method.

5. Your payment information is incorrect

What happened: If you're shopping online, one wrong digit in your credit card number or CVV will cause the card to decline at checkout. Since the billing address must match what the credit card company has on file, a mistake in your address can also result in a decline.

If you're shopping in person, your credit card might decline if you input the wrong PIN.

What to do: Double-check your card information before pressing "submit." If you're sending an item to someone else, be sure to uncheck "Billing address is the same as shipping address" so you can enter your own billing address rather than the recipient's.

6. You missed a payment

What happened: If you're repeatedly late with credit card payments, your issuer may place an administrative hold. If this happens, you won't be able to make any more purchases until the required payments are made.

What to do: Always make your credit card payments on time. If you have trouble remembering, consider setting up automatic payments on a monthly or biweekly basis.

7. You used your card while travelling

What happened: If you're on the trip of a lifetime and try to use your credit card in another country, the issuer may flag the purchase as suspicious. It's a way to protect your account from potentially fraudulent activity.

What to do: If you're planning a trip outside of Canada, look up whether you should contact your card company and inform them of your travel plans. They can make a note of where you're travelling so they can approve purchases that might otherwise be flagged.

Many banks, such as Scotiabank and RBC, no longer wish to hear from cardholders about upcoming travel as they have other fraud detection measures in place. However, National Bank customers should set up travel notifications online or in the app.

What to do if your credit card is declined

If your credit card is declined, here's what you should do:

• If you need to make the purchase now, try another payment method, like another credit card, debit card, or cash.
• Check your credit card balance to make sure you haven't reached your credit limit.
• If you forgot to activate a new card, follow your issuer's instructions to complete the activation process.
• Call your issuer to find out why the purchase declined. If you have available credit on the card, it might have been flagged for suspicious activity.
• Inform your issuer about large purchases or big travel plans to prevent them from flagging purchases as fraudulent.

If you can't resolve the issue quickly, you may have to delay making further purchases. Repeated tries typically won't fix the problem – and can actually make it worse.

Does a declined credit card hurt your credit score?

No, don't worry that the decline itself harms your credit score. After all, if that were the case, you could do some serious damage by simply trying to use an expired card or entering the wrong PIN.

That said, even though a declined card doesn't ding your credit score, some factors that could cause your card to decline, like missing payments or hitting your credit limit, can harm your credit score.

How to avoid a declined credit card

Here are a few things you can do to prevent your card from declining:

• Sign up for account notifications that let you know you're running low on available credit.
• Ask your bank to increase your credit limit. This way, you can avoid maxing out and negatively impacting your credit report.
• Watch your spending to ensure you don't use all of your credit limit.
• Make your minimum payments (or more) on time every month.
• Call your bank if you expect to make any unusually large purchases or if you'll be using your card abroad.
• Check your card's expiration date and make a calendar note to swap it for the new one a week before it expires. Better yet, activate your card as soon as you get it in the mail.

FAQ

Why is my credit card declined when I have money?

There are lots of reasons your card might be declined – even if you still have available funds or haven't hit your credit limit. It could be flagged for an unusually large purchase or location, you may have entered incorrect payment details, or your card might have expired.

What happens if my credit card declines?

If your credit card is declined, your purchase or transaction won't go through. If there was a simple technological error in running or processing your card, you can try again – and hopefully you'll have luck. Otherwise, you'll need to determine why your card was declined and address the issue.

How do you fix a card that has been declined?

Depending on why your credit card was declined, you may need to re-enter your card details, activate your new credit card, contact your credit card issuer to approve the purchase, or make a payment to put your account back into good standing.

Do declined cards affect credit score?

No, your credit score won't be affected if your card is declined. It can happen by mistake or for security reasons. However, if your card was declined because your card is over the limit or you're behind on payments, your score can be affected.

Why is my CIBC credit card declined?

CIBC states that they may decline your card if you've maxed out your card's credit limit or you're behind on your payments. If CIBC declines your card for a security reason, they'll contact you right away so the transaction can proceed with your approval.