Credit Card Declined But Money In Account

A photo to accompany a story about reasons why a credit card could be declined

Adobe Stock

We want to help you make more informed decisions. Some links on this page — clearly marked — may take you to a partner website and may result in us earning a referral commission. For more information, see How We Make Money.

Finding out your credit card was declined can be embarrassing — not to mention worrisome.

But a card can get declined for various reasons, and it's not always cause for concern. The most common reasons your card may be declined, according to Bola Sokunbi, a certified financial education instructor and founder of the personal finance website Clever Girl Finance, include not having any credit left on the card and fraud alerts on your account blocking new transactions.

Apart from insufficient funds and suspected fraud, there are several other reasons why your card may be rejected. And you can take action to preempt many of them — or at least reduce the chances of your card being declined the next time you're at a restaurant or you make an online purchase.

Pro Tip

Always carry another form of payment with you, such as your debit card or cash, in case your credit card is declined.

Here's a breakdown of why your card may be declined — and what you can do to prevent it from happening.

1. You Reached Your Credit Limit

Your card can be declined if you've hit the card's credit limit, or the upper threshold of charges you can put on the card. It's your bank's way of saying you cannot borrow any more money until you make a payment.

"Let's say you have a $4,000 credit limit, your balance is $3,500, and you're trying to put $1,000 worth of things on there — they're not going to allow that to go through a lot of the time," says Anna N'Jie-Konte, a certified financial planner and founder of Dare to Dream Financial Planning.

Maxing out your credit card hinders your ability to make purchases, but it's also not good for your credit score and can lead to long-term debt. Plus, reaching your credit limit is detrimental to your credit utilization — the ratio of your credit card balances to your overall limit – heavily influences your credit score. You'll increase your odds of having a good credit score if you don't exceed 30% of the available credit on your cards, and ideally keep your utilization below 10%. Generally the less credit you use, the better it is for your credit score.

You may be more likely to max out your card if you carry a balance since you're adding charges on top of the balance you already have, which also affects your utilization — all the more reason to pay your bills in full every month.

"If [your card is declined] because of your credit limit, that means it's time to assess what you're buying and take stock of your finances — what you're earning versus what you're spending — to see if there's a mismatch there," says N'Jie-Konte.

2. Fraudulent Purchases

Credit card companies can usually detect fraudulent purchases made on your card before you can. If you attempt to use your card at an unusual location or make a larger-than-usual purchase, that can trigger the issuer's fraud detection and block the transaction.

Sometimes a purchase you make looks like fraud, but it's not. If that's ever the case, you can usually clear it up with your credit card company through a text alert or a quick phone call. This can be inconvenient when there's no real threat, but it also protects you from actual fraud attempts. Most issuers give you the option to sign up for text or email alerts to notify you of suspicious activity on your account.

"I get alerts on my credit card because I've been a victim of identity theft," says Sokunbi. "Typically, I'll get a text message saying the transaction was declined and asking whether I attempted that transaction, and I'll say yes or no."

In the event a fraudulent purchase goes through, all major credit card issuers offer zero fraud liability, which means you won't be responsible for any unauthorized purchases made on your account. That's why it's generally safer to use your credit card for purchases than a debit card — banks will often have a zero liability policy for money stolen directly from your checking account, but it could take much longer to recover.

3. An Expired Card

If you're trying to use an expired card to make a purchase, it'll be declined. A credit card's expiration date is typically on the front or back of the card and has the month and year listed.

Your card issuer will usually remind you when your card is approaching its expiration date and send you a new one before the old one expires, so check your card's expiration and be on the lookout for an email or mailed letter from your issuer. If you notice your card is expiring soon, you may need to be proactive and reach out to your issuer.

4. You're Traveling

If you're traveling in a different state, city, or country, making purchases with your credit card could raise a red flag with your issuer. Banks and card issuers typically see transactions in different locations over a short period as a sign that your card may have been stolen.

In response, your issuer may freeze your account and prevent any purchases from going through to protect your information. If this happens while you're traveling you can call your issuer to let them know the purchases are valid, but the best way to avoid any confusion is by informing your issuer ahead of your travel plans.

5. Missed Payments

If you've fallen behind on your credit card payments, your issuer may restrict your ability to use the card. In that case, the best thing to do is call the issuer and explain your situation. They can give you a clear idea of what you need to do to bring the account current.

Keep in mind that late or missed payments usually mean late fees — and potentially a penalty APR. If you're missing payments because you're going through a financial hardship, talk to your issuer to see what your options are. You may qualify for a modified payment plan that allows you to continue using the account while you catch up.

How to Prevent Your Card From Getting Declined

While there are plenty of reasons your card may be declined, many of them are preventable if you proactively manage your credit accounts. Sokunbi says it comes down to paying attention to all the activity on your credit card, and reaching out to your issuer immediately if there is an issue or you see something suspicious.

Here are a few things you can do to avoid a declined card in the future:

Stay below your credit limit: Avoid both a declined card and a blow to your credit score by making sure you don't max out your card. Monitor your spending regularly so you don't let your balances get close to your credit limit.
Sign up for account alerts: Many issuers give you the option to sign up for text or email alerts that notify you of suspicious activity, so you can avoid using your card if there's been attempted fraud. You can also sign up for balance and spending notifications.
Pay your balance on time and in full every month: Practicing good credit habits will lower the chances of your card getting declined for late payments or going over the limit, and help improve your credit score.
Be aware of the card's expiration date: Credit cards usually expire after a few years. If your card is close to expiration, reach out to your issuer to replace it with a new card.
Notify your issuer of your travel plans in advance: A preemptive call to your issuer will make it easier for you to make purchases while you're traveling, both within the U.S. and abroad.

Bottom Line

You can't guarantee that your card won't ever be declined, but there are ways to reduce the chances of it happening. Keep your spending well below your credit limit, pay off your balance every month, and always notify your issuer of upcoming travel plans. The key is to take small steps toward actively managing your card account and being proactive with communicating with your issuer.