Jessica Simpson’s credit card was declined at Taco Bell. Here’s how it could happen to you too


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Credit card problems happen to all of us.

Key points

  • Even celebrities can face common credit card issues.
  • Your card may be declined during a purchase for a number of reasons, including fraud issues or because it has 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 ex-popstar recently joked with the hosts of The truth about the problems she had due to 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 shed some light on it, being denied a card is no laughing matter for many of us. 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 pessimistic, however. Having a card declined doesn’t necessarily mean you’re in financial trouble. There are a number of reasons why a card is declined, and many of them have nothing to do with your balance. Here are some reasons why this could happen to you.

1. The transaction was reported as fraudulent

This is actually an extremely common case – otherwise the more frequent — the reason 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 occur. But these algorithms are notoriously inaccurate.

If you make a purchase that is outside of your normal transactional behavior, chances are the algorithm will flag it as fraud. At best, this means you’ll receive a text or email alert letting you know that a questionable purchase has been made. At worst, your transaction will be declined and you will have to call the issuer to clarify things before you can complete your purchase.

2. You traveled without alerting your transmitter

This one is similar to the first point about fraud. Many credit card frauds occur in foreign countries, so an easy way to thwart this type of fraud is to simply report any point-of-sale transactions outside the United States as fraud. So, if you travel outside the country without alerting your issuer, your credit card transactions may very well be flagged.

The best way to avoid this? Notify your transmitter before you travel. Most banking apps these days allow you to let your issuer know about your travel plans right in the app.

3. Your card has expired

As with most things in life, credit cards have a lifespan. Although your card will not rot or deteriorate, it Is expire. Issuers will usually send you a new card at least a few weeks before your old card expires, but you can always try to swipe an outdated card without realizing it.

The simple solution is to activate the new cards as soon as you get them and redeem them in your wallet when the old card expires. Remember to completely destroy the old card so that it cannot be used against you later.

4. There has been a problem in the machine or the communication system

Every credit card system relies on several levels of technology to operate. But as useful as technology can be, it’s not perfect. In the event of a technical problem with the credit card terminal, your card may be refused or may not be read correctly.

And the same applies if there is a problem in the communication between the terminal and the card network. There might even be an error on the sender’s side 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 would not be complete if we did not include this reason. Yes, your card can definitely be declined when you try to make a purchase if you go over your credit limit. In some cases, your issuer may also charge you an overlimit fee.

But getting your card declined isn’t even the worst part of going over your credit limit. A maxed credit card can also have a serious impact on your credit score. I recently suffered a 25 point drop in my own score for reporting a high balance on my card.

On the plus side, it’s often easy to repair that damage score. All you have to do is settle your balance. Your score will bounce the next time the issuer sends an update to the credit bureaus.

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