Why was my credit card declined?

When your credit card is declined for a transaction and there's a line of people waiting behind you, you just want the situation resolved, pronto. Most of us reach for another payment method so we can high-tail it out of there and deal with the issue later. If you have had a transaction declined, one of these 6 common reasons is likely behind it.

1. Machine error

EFTPOS machines use the phone network to communicate with the banks to verify and authorise your transactions. If there is a system outage at the point of sale or with the bank's server, the transaction may be declined.

Solution:

In this situation, you're usually able to proceed with the transaction if you sign as authorisation slip. If it's a wider outage that impacts a number of different retailers, the merchant may stop processing card payments in the short-term while the issue is sorted.

2. Human error

Buying something online? If the transaction relies on you typing in the individual credit card numbers, then there's a chance you've transposed the digits or entered the expiry date incorrectly. It could also throw up an error message if you've selected the wrong card type (eg you select Visa, then type in a Mastercard account number).

Solution:

Online shopping is a very forgiving medium; simply review the digits and hit the purchase button again. The error message won't always tell you what went wrong, so check the number, full name, expiry date, card type and CCV on the back to make sure all the details are correct.

3. Suspected fraudulent transaction

If your credit card issuer notices suspicious activity on your account, it may block your account for security purposes. For example, if you usually only use your card for small, everyday transactions and then use your card to make multiple large purchases in one day, your issuer may put a freeze on your account and decline the transaction. If you're planning to use the card to make a big purchase or another transaction that may be considered unusual (such as spending on the card overseas), notify your card issuer so they're aware in advance and don't freeze your account.

Solution:

Your bank will usually contact you if this happens, and they'll quickly unfreeze the account if you confirm it was a legitimate transaction made by you.

4. Overseas security measures

If you're planning to use your credit card overseas when you're travelling, it's worth contacting your card provider to notify them of your travel dates and where you're travelling to. If your issuer spots an international transaction on your account without you giving them a heads up, they might suspect that your card is being used for a fraudulent transaction, decline the purchase and block your account.

Solution:

Waiting on hold for your bank is no-ones idea of fun, but letting them know before you travel can prevent you having card access issues if they block your card.

5. Insufficient funds

Almost every credit card has a maximum credit limit. Some credit cards will let you spend slightly beyond that limit and will charge you a fee. For instance, if your limit is $2000, your balance is $1900 and you make 2 purchases for $75 each, the card card provider might allow both transactions to be processed, but they'll levy a $15 over limit fee. Others will decline the transaction if it will push your balance over your available credit limit. You can keep track of your credit limit with your monthly statements or on-the-go via your online banking account or banking app.

Solution:

You should be able to make an instant transfer from your savings to your credit card if you need instant access. If it happens frequently and you think you could benefit from a higher credit limit, contact your card issuer for a credit limit increase.

6. Daily account limits

Some credit cards set a daily spending limit and your card will be declined if you spend beyond this. For instance, your total credit card limit might be $10,000, but you have a daily spending limit of $2,000. Unfortunately, many people first encounter this issue on the day that they try to spend more than their daily limit, which can be frustrating if you need to make an urgent payment.

Solution:

If there is a daily limit in place on your account, you can usually change this in internet banking. Otherwise, call your credit provider directly.

How credit card decline codes can explain why your credit card was declined

When your card is declined in a store, the EFTPOS machine receives a code from the bank handling the transaction that describes why the transaction wasn't approved. As an example, here are some Commonwealth Bank credit card declined codes:

Keep in mind that codes can be different between banks and EFTPOS machines. For example, the St.George declined code 05 means "Do Not Honour", which covers suspected fraud, stolen or expired cards, insufficient funds and invalid CVNs (card verification number).

What to do when your credit card is declined

Here are you have a credit card declined and you've tried the above solutions, check the declined code on the merchant receipt. The terminal will print out or display this code, which can help you find out why it was declined. If it isn't immediately clear from the receipt, contact your credit card issuer; they will help you work out why the transaction was declined and what you can do next.

Who to contact when your credit card transaction is declined

If you're unsure why your card was declined, you can contact your card issuer directly to confirm why and resolve the issue. We've provided a list of contact details for some of the credit card issuers in Australia in the table below.

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