Avoid Getting Your Credit Card Declined

In September 2014, President Barack Obama and First Lady Michelle Obama dined at Estela, a New York City restaurant. The meal went well—until the president’s credit card was declined. If the US president can have a card declined, it can happen to anyone, and occasionally it does, not just for a missed payment or breach of the credit limit but increasingly for reasons that have little to do with irresponsible card use. Having a charge declined can be mildly inconvenient…or it can cause a major disruption such as when you are traveling. Here are potential causes and how to reduce the odds that they will result in a rejection…

You make a purchase that does not fit your usual spending patterns. Software is monitoring cardholder spending more closely than ever to prevent fraudulent charges by thieves. But it sometimes declines legitimate purchases. Particularly likely to be declined are…

Purchases made in geographic areas—inside and outside the US—where the cardholder doesn’t typically shop.

Purchases larger than normal for the cardholder.

What to do: When possible, alert your card’s issuer before making purchases that are unusual for you, and especially if you will be traveling outside the US. If a charge is declined and you suspect this could be the cause, try a different card or try to contact your card issuer on the spot to straighten things out.

Hotel and car-rental “holds” have pushed you over your credit limit. Hotels and car-rental companies often place temporary “holds” on a portion of a customers’ credit line to ensure that there will be enough credit available when the payment is processed. These holds can last for weeks and might be for hundreds of dollars more than the actual charge—the merchants want to protect themselves in case customers incur larger bills than expected. If you have several large holds in quick succession, it could push you over your card’s credit limit even if you haven’t spent more than that limit. (Gas stations often impose holds, too, but these tend to be more modest in size and duration.)

What to do: If you spend money on hotels and/or car rentals multiple times within about a month, spread these charges among several cards or use a card that has many thousands of dollars of additional credit limit available. Or contact the issuer of the card that you wish to use prior to making charges that are likely to involve holds. Explain the situation, and ask whether your credit limit can be increased.

Your credit limit has been slashed. Issuers occasionally cut a credit limit even though the cardholder has never missed a payment or broken a rule. This tends to occur when the cardholder has recently applied for multiple new cards…or when something negative pops up on a credit report—even if the credit report listing is in error.

What to do: Read the notices that you receive from your credit card issuers, or at least skim them, for any mention of changes to your credit limit. Issuers must provide 45 days’ written notice before reducing a credit limit.