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Five reasons why your credit card could be declined

April 30, 2014 12:35 IST

Five reasons why your credit card could be declined

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Rajiv Raj

What if after making some hefty purchases at a store you pull out your credit card only to be told that your transaction has been declined?

Exceeding one's credit limit is one of the most common reasons why a credit card may be declined, but it is not the only one. Here are some other reasons that can be responsible for your credit card being declined:

1. A regular defaulter

If you miss your credit card payment schedule regularly, because of reckless purchases, you will not only end up with a late payment fee, you may find your transaction being denied one fine day.

You also run the risk of accruing bad credit, as each of your defaults will show up in your CIBIL report. This will contribute towards a poor CIBIL credit score.

In order to avoid such situations, make sure your purchases are within your limit and your repayments are timely.

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The author is a credit expert with 10 years of experience in personal finance and consumer banking industry and another 7 years in credit bureau sector. Rajiv was instrumental in setting up India's first credit bureau, Credit Information Bureau (India) Limited (CIBIL). He has also worked with Citibank, Canara Bank, HDFC Bank, IDBI Bank and Experian in various capacities.


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2. Unlikely purchases

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Rajiv Raj

A credit card company keeps a track of your transactions and if it finds that your card has been swiped for something that is out of the ordinary and is quite big in value it may decline your purchase and put a fraud alert on it.

Although such cases are rare, it is a measure put in place for your own safety.

In such a case, just call up your card issuer and clarify your identity.

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3. A costly temporary hold

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When you are travelling internationally and using your card to make payments, the hotel you are staying in, may put a temporary hold on your account.

In some cases, this charge may be much higher than your actual charge. You may not even be aware that such a charge is eating up a sizeable amount of your available credit and will be considered as a high utilisation rate.

This too will have a negative bearing on your CIBIL report.

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Photographs: Issei Kato/Reuters
Tags: CIBIL

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4. An expired card

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Your purchase may also be declined if you are using an outdated card. Mostly a card issuer sends a new card well ahead of the expiry date, but just in case there is some problem like it getting lost in transit, make sure you check with your issuer for updates if you don't have a new one in hand, once your card has expired.

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5. Your personal details

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Some purchases may require you to put in your residential address details or pin code at the time of swiping your card. If you have moved houses and haven't updated your personal information with the issuer you can find yourself in a spot.

In order to prevent such situations, log in to your account and make sure your personal details are updated in case of any changes.

A credit card is the power of plastic money in your hands, but if you do not use it responsibly it can land you in a lot of trouble. Not only will it lead to money problems, a poorly handled credit card will also be a cause of a bad credit score.


Photographs: Uttam Ghosh/Rediff.com
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