Have you ever experienced a situation when you use your credit card in a merchant establishment only to be informed that the card does not work because it is blocked? Rajesh used his credit card at a restaurant and was shocked to know that his card was blocked by the bank. Fortunately, he had another credit card to pay up the restaurant bill. However, the bigger problem bothering Rajesh was why his card was blocked.
On calling up the bank, he understood that his recent usage of the card in a foreign country had prompted the bank to block the card as a safety measure. While banks usually inform the customer when the card is blocked or if an unusual activity is reported, this did not happen in Rajesh’s case.
Here are some instances which you should watch out for when your credit card may be blocked.
Usage in a different location:
This happens when you regularly use your card in a particular country and suddenly use it abroad. In the case of Rajesh, who happened to use his credit card to buy electronic items on his travel to the Middle East, the bank blocked his card. As this was an uncommon spending pattern on the card, the bank suspected this to be a fraudulent activity.
It is advisable to inform your bank if you plan to use your card abroad. Often, international usage of cards is locked by banks and you will have to unlock this before travelling abroad. However, if this is not the case with your card and if you happen to use it in a different location, the bank may temporarily block your card.
Sometimes, technical errors on the part of the bank can result in your card being blocked. This usually happens when there are technological upgrades or when advanced payment systems are introduced.
The merchant where you use the card may not have updated his system or there may be technical snag at the bank’s end. In such cases, your card may be blocked. While this is a temporary phenomenon and may resolve automatically, sometimes, your card may continue to remain blocked.
Change in terms:
Banks constantly change their terms and conditions governing credit cards and usage. While banks usually inform these changes to the customers either by sending mailers or by putting these changes up on their website, a majority of these announcements go unnoticed. One such change in terms relates to blocking of cards depending on the usage.
Accordingly, if the bank finds out that you have been irregular in your credit card payments with other credit cards you hold, the card you hold with that bank may be blocked. This could either be because the bank checks your credit report with the credit agency or it could be because you hold multiple cards with the same bank where your credit worthiness is in question.
Banks usually watch out for a pattern of your normal expenses on the credit card. If you happen to make an uncommon purchase of high value, then this is suspected to be an unusual activity by the bank.
Take the example of Priya who had a credit card with a credit limit of Rs 75,000. Priya usually used her card to make regular purchases of grocery and payment of utility bills. Her credit card bills did not exceed Rs 15,000 in a month. In a particular month, she spent Rs 70,000 for an international hotel booking. This triggered the case of an uncommon purchase and her card was blocked by the bank.
Entering incorrect data:
Another reason why your card may be blocked could be that you repeatedly entered incorrect information while trying to perform a transaction. For example, Sunil was trying to make an online purchase using his credit card, but had forgotten the secure PIN to be keyed in. After four failed attempts of entering the incorrect PIN, he realized that his card had been blocked by the bank.
Repeatedly entering wrong address or CVV number can also result in the card being blocked by the bank, as fraudulent usage is suspected. While you cannot control the bank from blocking your credit card, you can certainly avoid the situation by taking care of your credit card usage. If there is a continuous decline in transactions, you should stop using the card, as the bank will block it. Similarly, it is important to enter the right information while you use the card.
Remember to call the bank and verify your unusual transactions to get the card unblocked, rather than assume that it will correct automatically.
(The writer is the CEO of BankBazaar.com)