Jessica Simpson’s credit card was declined at Taco Bell. It could happen to you too
Credit card problems happen to all of us.
- Even celebrities can face common credit card problems.
- Your card may be declined during a purchase for a variety of reasons, including fraudulent reasons or because it has expired.
When you’re struggling to set your own budget, it’s easy to think that if you were a rich celebrity, all your financial problems would be solved. But time and again we are shown that celebrities also have their own money problems.
Take Jessica Simpson for example. The ex-pop star recently joked with the hosts the real one about the problems she faced putting her money into her business.
“I’m emptying my bank account. I don’t have a working credit card,” she said, adding, “I went to Taco Bell the other day and my card was declined.”
While she may take it lightly, many of us don’t laugh when a card is declined. Not only is it potentially embarrassing — especially if you end up holding the line — but it can also be scary if you don’t know what’s going on.
It’s not all doom and gloom, however. A card denial doesn’t necessarily mean you’re in financial trouble. There are a number of reasons a card might be declined, and many of them have nothing to do with your balance. Here are some reasons why it might happen to you.
1. The transaction has been flagged as fraudulent
This is actually a very common – if not the most most Frequent – reason why credit card purchases are declined at the point of sale. Credit card issuers rely on complex algorithms to detect fraudulent purchases as they happen. But these algorithms are notoriously inaccurate.
If you make a purchase that falls outside of your normal transactional behavior, there’s a good chance the algorithm will flag it as a scam. At best, this means receiving an SMS or email notification letting you know that a questionable purchase has been made. In the worst case, your transaction will be declined and you will have to call the issuer to clarify things before you can make your purchase.
2. You traveled without notifying your issuer
This is similar to the first point about cheating. Much of the credit card fraud takes place abroad. An easy way to stop this type of scam is to flag every transaction at a non-US point of sale as a scam. So if you travel abroad without notifying your issuer, your credit card transactions may very well be reported.
The best way to avoid this? Inform your issuer before you travel. Most banking apps these days allow you to notify your issuer of travel plans directly within the app.
3. Your card has expired
Like most things in life, credit cards have a shelf life. While your card won’t rot or go sour, they will does go out. Issuers will usually send you a new card at least a few weeks before your old card expires, but you could still try to swipe an outdated card without realizing it.
The simple solution is to activate new cards as soon as you receive them and swap them out in your wallet when the old card expires. Don’t forget to completely destroy the old card so it can’t be used against you later.
4. There was an error in the machine or in the communication system
Any credit card scheme relies on multiple layers of technology to function. But as helpful as technology can be, it’s not perfect. If there is a technical problem with the credit card terminal, your card may be rejected or not read correctly.
The same applies if the communication between the terminal and the card network is disrupted. There could even be an issuer error when verifying a transaction. Really, if any part of the system has a problem – it everything has a problem.
5. You have exceeded your credit limit
This list wouldn’t be complete if we didn’t include this reason. Yes, you can definitely decline your card when trying to make a purchase if you exceed your credit limit. In some cases, your issuer may also charge you an overage fee.
But getting your card declined isn’t even the worst part about going over your credit limit. A maxed out credit card can also seriously affect your credit score. I recently suffered a 25 point drop in my own score because a high balance was reported on my card.
On the bright side, repairing this damage is often easy. All you have to do is withdraw your balance. Your score will be reported back the next time the issuer sends an update to the credit bureaus.