What to Do When Your Credit Card Transaction Is Denied

Has this ever happened to you? You're attempting to buy something online through an e-commerce site. Or you're trying to make a large purchase at a furniture store or jewelry shop. Or maybe you're just paying for your bill at a restaurant or your groceries at the supermarket.

Then it happens: your credit card gets denied. Your first reaction is confusion; but then the fear starts to set in. You start to get flustered, and all kinds of doomsday scenarios begin running through your head.

The truth is, denials of credit cards are not uncommon these days. And since banks are trying feverishly to prevent fraud and identity theft, they sometimes are a bit overzealous in flagging "suspicious" transactions. In other words, just because your credit card gets denied doesn't necessarily mean that you did anything wrong.

Here's what you should do if your credit card transaction gets denied.

DURING THE INCIDENT:

1. Rerun the transaction. You'd be surprised how often a second attempt works after the first try fails. Besides, there's always a chance that your card number or an expiration date was entered incorrectly (especially with online purchases).
2. Talk with the credit card issuer. Denials are usually initiated by the financial institution that underwrites the card, not by Visa, MasterCard, Discover, or American Express. If the situation permits, call the credit card company and ask why your card was denied. It may be a simple problem which you can fix over the phone.
3. Use an alternate form of payment. If all else fails, you may have to charge the purchase on a different card, use your debit card, or write a check. Then you can address the problem at a later time. 

AFTER THE INCIDENT:

1. Figure out what happened. If you haven't already spoken with your credit card issuer, call them up as soon as possible and find out why your transaction was denied. (Many companies have customer service departments which operate 24 hours a day.)
2. Square away your account. If you missed a payment, take care of it immediately (often, you can make phone or online payments). If your credit limit was exceeded, ask to have it raised. Then take steps on your end to make sure that the issue doesn't arise again.
3. Talk with the security department. If the bank denied your transaction due to suspected fraud, ask to speak to the security and/or fraud protection department. They may be able to tell you why the transaction was flagged (an abnormal amount, an unusual merchant or location, etc.). If you want, you can tell the representative to ignore these types of transactions in order to prevent further transaction denials.
4. Have a backup plan. If you don't already have another credit card in case of emergencies like this, then consider getting one. A prepaid credit card might be a good solution to this problem because it won't let you carry a large balance.
5. Change credit cards. If you are ultimately dissatisfied with your issuer, or if you continue to experience denials, then transfer your balance to a new or different credit card and close out the account. You don't need the aggravation, and there are plenty of credit card offers out there.