Credit card problems happen to all of us.
- Even celebrities can face common problems with credit cards.
- Your card can be declined during a purchase for any number of reasons, including due to fraud concerns or because it’s expired.
When you’re struggling to make your own budget, it’s easy to believe that all your financial problems would be solved if you were a rich celebrity. But time and time again, we are shown that even celebrities have their own money problems.
Take Jessica Simpson, for example. The former pop star recently joked with the hosts of The Real about the problems she has had due to her investing her money in her business.
“I’m emptying my bank account. I don’t have a working credit card,” he said, adding, “I went to Taco Bell the other day and my card was denied.”
While she may take it lightly, a card being declined is no laughing matter for many of us. Not only is it potentially embarrassing, especially if you end up holding up the line, but it can also be scary if you don’t know what’s going on.
However, not everything is pessimism. Having a card declined doesn’t necessarily mean you’re in financial trouble. There are several reasons to decline a card, and many of them have nothing to do with your balance. Here are some reasons why it might happen to you.
1. The transaction was marked as fraudulent
This is actually an extremely common reason, if not the most common, why credit card purchases are declined at the point of sale. Credit card issuers rely on complex algorithms to help detect fraudulent purchases as they happen. But those algorithms are notoriously imprecise.
If you make a purchase that is outside of your normal transactional behavior, there’s a good chance the algorithm will flag it as fraud. At best, this means you’ll receive a text message or email alert informing you 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 clear things up before you can make your purchase.
2. You traveled without notifying your issuer
This is similar to the first point about fraud. A lot of credit card fraud occurs in foreign countries, so an easy way to block that type of fraud is to simply mark any point-of-sale transaction outside the US as fraud. So if you travel out of the country without alerting your issuer, there’s a good chance your credit card transactions will be flagged.
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 right in the app.
3. Your card is expired
As with most things in life, credit cards have a shelf life. While your card will not rot or spoil, it does expire. Issuers will usually send you a new card at least a few weeks before your old card expires, but you can still end up trying to swipe an expired card without realizing it.
The simple solution here is to activate new cards as soon as you get them and change them 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 a failure in the machine or in the communications system
Every credit card system relies on multiple levels of technology to function. But as useful as technology can be, it’s not perfect. If there is a technical problem with the credit card terminal, your card may be declined or may not be read correctly.
And the same thing happens if there is a communication failure between the terminal and the card network. There could even be an error on the part of the sender when verifying a transaction. Really, if any part of the system has a problem, everything has a problem.
5. You are over your credit limit
This list would not be complete if we did not include this reason. Yes, you can definitely decline your card when trying to make a purchase if you go over your credit limit. In some cases, your issuer may also charge you an over-limit fee.
But having your card declined isn’t even the worst part of being over your credit limit. A maxed out credit card can also have a serious impact on your credit score. I recently suffered a 25 point drop in my own score for having a high balance reported on my card.
On the plus side, it’s often easy to repair that punctuation damage. All you need to do is pay off your balance. Your score will be restored the next time the issuer sends an update to the credit bureaus.