Why Was My Credit Card Rejected or Blocked?

Have you had a credit or debit card purchase rejected when you were sure you were well under the credit limit? Here's what might have happened.

People often use a credit or debit card to buy gas at a "pay first" station, rent a car, or pay for a hotel stay after giving the card to the hotel at check-in as security that they will pay the bill. All of these transactions have one thing in common: The customer is offering the card as payment for a transaction, but because the business doesn't yet know the total that will be billed, the business puts a "hold" on your debit or credit card for the estimated amount you will spend. Usually the amount withheld isn't that large and is held only for a short time. Unfortunately, some businesses have been known to hold much more than the estimated amount you'll spend and keep the hold in place for up to 45 days.

Some other reasons for a rejected card might include:

• you're over your limit or
• you've been paying late.

How to Prevent Blocked Cards

Whenever you pay with a credit or debit card at a gas station, hotel, rental car agency, or anywhere else you provide your card before the amount of the bill is certain, you can protect yourself in one of two ways:

• Pay with the same card, not with cash or a different card than the one you gave initially. That way, the hold should come off within a short time after you pay.
• When you pay, remind the business to remove the hold from the card you provided, now that you've paid your bill.

Other Reasons for Rejected Credit Cards

It's happened to all of us. You present your credit card to a merchant or restaurant waiter only to have it returned as rejected. This can happen even if you pay your bills on time, all the time.

So what are some other reasons for why a credit card could be rejected? When a merchant swipes your card, it's contacting a credit card guarantee company that has a record of your credit status. The guarantee company checks for:

• Your overall credit limit. If you've exceeded your line of credit, the guarantee company probably will tell the merchant to reject your card.
• Your daily limit. Many credit card companies don't let cardholders use their card more than a certain number of times a day or spend more than a specific amount per day. These limits are meant to protect against the use of stolen cards. If you've exceeded the daily limit, the merchant will be told to reject the card.
• The amount of the particular purchase. Merchants must check with the guarantee company for approval on purchases larger than a certain dollar amount (called a "floor limit"), which varies among guarantee companies and merchants.
• Whether you're late on a payment. If you often pay late, the guarantee company might tell the merchant to reject your card.

Will Your Credit Card Get Taken Away?

If the card was reported stolen or if you're excessively delinquent in your payments, the guarantee company might tell the merchant to keep it. Some merchants receive rewards for turning in revoked cards. Most merchants, however, refuse to confiscate cards and, instead, simply tell you your card was not accepted.

Learn More

For more information about choosing and managing credit cards, get Solve Your Money Troubles: Strategies to Get Out of Debt and Stay That Way, by Amy Loftsgordon and Cara O'Neill (Nolo).

If you need further help managing your debts, consider talking to a debt relief lawyer.