Declined Vs. Dishonored Credit Card


When your credit card issuer declines a transaction, the declination prevents you from making a purchase. When a card issuer dishonors a credit card transaction, it means the card issuer refuses to honor a previously approved transaction. Credit card issuers can decline and dishonor credit card transactions for a variety of different reasons.

Credit Card Authorization

  • When you attempt to make a purchase with your credit card you swipe your card through a point-of-sale machine, and the credit card issuer either declines the transaction or grants a preliminary approval. If the transaction is declined, you cannot make the purchase on that card. However, when the card issuer approves a transaction, it can still dishonor it, if a valid reason exists, when the merchant's bank contacts the card issuer for payment. Even if the card issuer approves the transaction and pays the vendor the amount due, federal law enables the card issuer to dishonor the transaction at a later date and demand a full refund from the vendor.

Card limit

  • When you obtain a credit card, the card the issuer establishes a line limit on your account. Typically, if you attempt to make purchases that would exceed the limit, your card issuer declines the transaction on the spot. However, you do have the option to give your card issuer discretion to approve over-limit transactions. Your card issuer can then assess each over-limit transaction on a case-by-case basis and either approve or decline transactions regardless of your limit. When over-limit transactions are approved, your card issuer can charge you over-limit penalty fees. Credit card issuers sometimes decline transactions that occur overseas, even if they are not over-limit, if you did not notify the card issuer of your travel plans.

Contested Charges

  • Under federal law you have the right to dispute charges on your credit card statement you believe to be fraudulent or erroneous by writing a letter to your card issuer within 60 days of the charge appearing on your statement. Contestable billing errors include instances when merchants process a transaction for the wrong amount or bill you for goods or services you never received. In some instances you can contest charges in excess of $50 that were processed by merchants within 100 miles of your home for up to one year after the transaction date. If your card issuer determines your claims are valid, then the card issuer dishonors the payment and recoups the money from the merchant.


  • Due to the possibility of credit card payments being dishonored as a result of fraud or billing errors, some merchants are reluctant to accept card payments. Many merchants will also refuse to accept card payments from customers who have previously had dishonored payments. However, although credit card declinations sometimes cause embarrassment to the card holder, business owners suffer no financial loss as a result of a payment being declined because declinations prevent the card holder from making the purchase.

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