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I was Christmas shopping and went to the counter to check out and my credit card wouldn't work. Discover turned it off! I had made too many transactions. Should I be angry? I lost all my Christmas gifts.

By , CardRatings contributor
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It's an increasingly common phrase at big box stores, shopping malls and even fancy restaurants:

"I'm sorry, but your credit card has been declined."

Nobody likes hearing that. Getting your credit card declined is one of the most embarrassing things you can go through, especially when you're already stressed out with holiday shopping. But understanding the reasons why can help you better plan your future shopping sprees.

A retailer's point-of-sale system will only hand out a rejection notice for one of three reasons:

  1. You've hit your credit limit
  2. You failed to make your payments
  3. Your bank's fraud detection team sees an unusual pattern in your purchasing

Assuming you were up to date on your bills and you knew you had some headroom on your credit card, let's look at what happens when your bank worries about a potentially stolen card.

The best credit cards compare your current purchasing activity to your previous purchasing habits, while checking your account history against typical spending patterns that might happen when you travel for business, go on vacation, or hit the mall. Discover has won numerous awards an industry accolades for both detecting and resolving fraudulent transactions using systems like these.

For instance, if you buy coffee at the same shop every morning, but your card unexpectedly gets charged for a similar transaction on the other side of the country, your account may be flagged. Appearing to be in two places at once, especially with "card swiped" transactions, can alert investigators to a potential cloning case. Likewise, if an account suddenly sees a sharp increase in unusual purchases, an account manager may cut off your card until you speak with a customer service agent and confirm that your card hasn't been stolen.

If this was a legitimate attempt by your bank to disrupt what they thought was fraudulent activity, I don't think you should be mad at Discover. Instead, register for their free, real-time alerts that can notify you in advance of a declined transaction. Then, just notify Discover that you intend to make some larger-than-usual purchases or that you're planning a trip. This proactive approach to credit card security protects you, your favorite merchants, and your card issuer.

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