Gotta agree that really sucks! They should let you use your credit period.
Chalk it up to a lesson learned. I've purchased from them twice once using pay pal and once using a credit card. Never had trouble but I still don't trust them. Using a method of payment that does not provide some way to get your money back in case of fraud is foolish. Won't western union refund your money? What they did sounds like fraud to me.