Higher volumes of declined credit card transactions can lead to a variety of negative results for merchants and customers. Credit card declines can result in penalties and an increase in the high denial ratio. It’s a common experience and can happen due to a variety of reasons.
However, credit card declines can be frustrating for customers as it leaves them in the middle of their purchase, and the feeling of embarrassment at a retail store cannot be expressed in words.
Finding the right solution for credit card declines depends on the type of transaction for a specific business. In this post, we are describing the most common reasons for credit card declines for merchants.
Your Card Limit is Met
If your purchase amount exceeds your credit card limit, your purchase is likely to be denied. Always know your card’s credit limit and keep an eye on the balance so you won’t be surprised if you reach the limit before the end of your monthly billing cycle. If your purchases are consistently approaching your credit limit, check with your issuer to request a higher credit limit.
To maintain your credit rating, it is advisable to keep your credit utilization below 30 percent. In other words, keep your balance below 30% of your total limit. When you reach your limit, work out a plan to pay off your debt before spending more. Consider transferring your balance to another card with a low-interest rate or zero percent, or apply for a personal loan with lower interest rates.
Keep in mind that a credit card issuer may lower your credit limit if your credit score drops or if you keep missing payments. However, the issuer must give you 45 days’ notice before making a change.
The type of card you use is not accepted.
Not all credit cards are created (or treated) the same. Certain credit card networks are more widely accepted than others, with Visa and Mastercard leading the way.
Discover is widespread in the United States, but less in other countries. And in some countries, Discover cards are not accepted at all.
American Express is a popular network, but it is known for the higher interbank fees for companies that accept its cards. As a result, Amex cards are accepted in many countries, but whether or not they are widely used in a particular country varies.
Most merchants clarify what types of credit cards they accept. When shopping online, look for the FAQ section on the website. In addition, you can usually find a web list of other common payment questions.
You will likely find signs or stickers describing the cards the merchant accepts at the door or near the checkout counter at physical stores.
Large holds or pending transactions on your account
Even if you haven’t reached your credit limit, the issuer may not allow new transactions if there are large blocks or pending transactions on your account.
Companies such as car rental companies, hotels, and gas stations often place temporary holds on your account to ensure that your card is not declined if they have to charge you a certain amount (usually more than what you pay). These holds will appear on your pending transaction list and will be reflected in your card balance.
While these are temporary charges that should disappear if your account is charged, it can take days until the rejection is lifted and your issuer declines a charge due to a very high due balance.
Your card is being used for an unusual purchase.
If an attempt to purchase your card falls outside of your typical spending pattern, it could result in the issuer rejecting your card. Again, this is to prevent fraudulent transactions.
This can happen once when you are traveling, especially if you are in another country. If too many purchases are made in places that don’t match your normal expenses, your card may be declined to protect against fraud.
To avoid having your card rejected when you are outside your home location, inform the card issuer before traveling, especially if you are traveling to another country.
You are trying to make a big purchase.
Keep an eye out for a 65-inch flat-screen TV. After months of shopping, you finally decide to dive in and buy it. Unfortunately, the credit card used to make the purchase was declined.
The credit card issuer may decline the purchase due to its high price. For example, a large purchase, such as a couch, diamond ring, or large device, may be declined until the card issuer can guarantee that you are the one who is buying the expensive item.
Similar to infrequent activity, a purchase in an unusual location can trigger an alert of suspected fraudulent practices. Generally, your credit card issuer knows the geographic boundaries of your typical transactions. Sometimes, when you try to buy in some other country (even if they are not fraudulent), it can alert the issuer.
In other cases, this can also be a warning sign for fraudulent activity if the card issuer discovers that people are shopping over long distances in a suspiciously short time.
A credit card can be declined for several reasons. But whatever the reason, the best way to resolve the issue is to contact the card issuer immediately once you hit the button. A quick phone call to the customer care of the card issuer can help solve the problem. Also, getting the services of a payment processor like Paypound can assist you with credit card problems.
A toll-free customer service number is usually mentioned on the back of your card. In other cases, the situation can take much longer to resolve. Make sure the card issuer has your latest contact information in case of a problem such as suspected fraud. Credit card declines are temporary, and there are many ways to solve them. All you need is to contact your card issuer and take action on their advice to fix the problem as soon as possible.