3 Reasons Your Credit Card Could Be Declined -- Even if You're Below Your Spending Limit

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Denied the option to swipe your card? These reasons could be to blame.

Whenever you're issued a credit card, you're given a spending limit you can reach on that card. Once that limit is hit, you can't add any more charges to your account.

Over time, your credit limit may increase. For example, an issuer might start you off with a limit of $5,000, but as your income goes up and you establish a pattern of timely payments, your limit may rise to $10,000.

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If you max out your spending limit and attempt to charge expenses anyway, you'll have your credit card denied. But sometimes, you may land in a similar situation even if you're well below your spending limit. Here are a few reasons why that could happen.

1. Your purchase has triggered a fraud alert

When you charge expenses on a credit card, you tend to fall into a certain pattern. If your credit card company notices a deviation from that pattern, it may flag a purchase as fraudulent and deny it until it can be further investigated.

For example, if you live in Rhode Island but try to use your credit card to fill up gas or buy groceries in Oregon, your credit card company may deny that purchase because it's unusual for you to be using your card on the other side of the country. Similarly, if you normally charge $300 in smaller miscellaneous expenses on a given card, and one month you decide to charge a $1,500 laptop, that could get your account temporarily flagged.

The good news is that if your account is tagged for fraud, you'll generally get a text alert or phone call from your credit card company asking you to verify that the charge is legitimate. But that won't always happen right away, and in some cases, you may need to whip out cash or come up with a backup plan if the purchase needs to happen immediately.

Incidentally, it's always smart to call your credit card company and tell them when you'll be traveling, and where you're going. That can help avoid a scenario where you're denied the option to charge expenses simply because you're in another part of the country.

2. Your pending purchases haven't gone through

When you charge expenses on a credit card, they don't always post to your account immediately -- but there's still a record of them, and they do, in fact, count toward your spending limit. As such, you may mistakenly think you're below your monthly limit because you've glanced at your actual balance without taking your pending charges into account.

For example, if your credit card limit is $5,000 and you log onto your account and see your current balance is $4,700, you might assume you're good to charge another $300. But if you have $250 in pending charges, your card is likely to be denied.

3. There's a hold on your card

Often, when you stay at a hotel or start a tab at a bar or restaurant, you'll have a hold put on your card for incoming or potential charges. For example, a hotel will place a hold in case you cause damage to your room or hit up the minibar. That hold won't always disappear right away. And if it has taken you up to your spending limit, you'll be denied any new charges.

For example, say your credit card limit is $5,000 and you've racked up a $4,000 balance. If the hotel you're staying at for the week places a $1,000 hold, your credit card could be declined until that hold is lifted once you've vacated the property.

Clearly, it's possible to have a credit card denied even when you haven't maxed out your spending limit. And that's why having more than one card is wise. That way, if there's a problem with one, you can use another as backup. At the same time, it helps to periodically request a spending limit increase to give yourself more leeway. Granted, you'll need to discipline yourself to not use that higher limit recklessly, but having the ability to charge a higher amount could come in handy when you need it.

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