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Yes, I think you're right about the address.
If you entered a US address against the card, and if that address is not the one which the card provider knows about, then the card will be rejected. That's not Amazon's fault. It's the normal security procedure on a credit or debit card.
One solution would be to keep two accounts with Amazon. One for the Kindle, in which the payment method is the card with the US address. The other would be for buying gift certificates and non-Kindle stuff; in that case, you register the card with your "real" address.
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