CREDIT CARD CONFIDENTIAL – An Insider Reveals How To Avoid Heartbreak, Wasted Fees & Identity Theft

There are 10 basic reasons for credit card declines.  And, every day, credit card call centers get call after call from customers whose credit cards will not work or have been otherwise declined because of one of these reasons.

This is a scenario I’ve discussed before. You go to a restaurant, have a nice dinner, and hand over your card in order to pay the bill. The waiter comes back with the card and tells you that your credit card was declined.

Sometimes the waiter will recite a reason why your credit card purchase was declined. He or she may be correct as in “It looks like your card is expired.” Regardless, the rule as you probably know by now is this: Do not assume anything when your credit card is declined. Instead, call your credit card company to find out what’s going on.

To prepare you for that phone call, here is a list of the ten basic reasons for credit card declines and their “solutions.”

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On a lighter note, today I’ll give you a taste of some of the amusing conversations with credit card account holders that I’ve had. There’s a common theme running through all of them. See if you can identify it. 

As you know by now, I have a good deal of empathy for my customers and I do whatever I can to help them out. I am sure that, because I care, I give the mistaken impression to many credit card account holders that the corporate entity that is their “credit card company” also cares and offers personalized service. So I may well contribute to the ideas my customers have, as reflected in these snippets of conversations below.

Conversation #1:

This involved a customer who had maxed out his account and called in to try and get the over limit fee that was charged on his account waived. At the end of this particular call, the gentleman with whom I was speaking  tells me that he is “really disappointed” in the fact that I let his card go over limit. He then instructs me that the next time I see his account getting close to his limit, I should call him and give him “a heads up” so he’ll know he can’t make another purchase.¹

Conversation #2:

This customer’s payment arrived late and he was charged a past due fee. At the end of the call he complains to me about how long it took “us” to get his payment into his account. He tells me that, next time, he wants us to ”watch the mail for my payment and try to get it deposited quicker.”²

Conversation #3:

This customer was looking for a balance transfer deal and was disappointed to find that there were no promotional offers available for his account, so he asked, “Would you mind giving me a call the next time you see a good offer on my account?”³

Conversation #4:

This conversation is my personal favourite. This customer had trouble with his cable company putting incorrect charges on his credit card account. He was very disappointed in me for letting this happen. (Hmmm. So who gave the credit card number to the cable company in the first place, I wonder?)

Anyway, he asked me if I would ”mind keeping an eye on the cable company,”  and added, ”if you see them about to charge my account, stop them from doing it.” He said this, of course, in all seriousness.

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A ghoulish topic for Halloween involves credit cards and the dead.

Like it or not, we’re all mortal. Likewise, most of us will not spend our last hours paying off and closing our credit card accounts. So the dead do have credit cards, at least until the departed’s credit card issuer finds out about his death. Then the credit card issuer will kill the card itself.

Most of the time when the primary credit card account holder has died, the executor or next of kin will call the deceased’s credit card issuer and inform the agent that the cardholder has died. The agent who receives this information is required to refer the account to the probate department where the account will be closed.

However, I have encountered many active accounts in which the primary cardholder has been deceased for months or even years. In these cases it is not the dead who are rising from the grave to charge groceries, gas or jeans. Other authorized users on the account have simply continued to use the deceased’s credit card account. 

Typically, such a user will have his own card, a card on which his own name is embossed. He continues to use that card while assuming the deceased’s responsibility of making  payments in order to keep the account current and active.   

A credit cardholder in this situation may or may not realize that preserving this arrangement hinges on keeping the credit card issuer in the dark about the death of the primary account holder. Because once that cat is out of the bag, there will not be a ghost of a chance of keeping that account open.

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There are three possible explanations  why your credit card won’t work when you are trying to use it to make a purchase. Each involves a different problem and a different set of solutions specific to that problem. A couple, if not dealt with immediately, can snowball to bigger problems.

Yet when your credit card won’t work, you don’t know which of the three causes is to blame. You don’t know if it is something that will snowball. So you are well advised to protect yourself from worst case scenarios and always call in right away. 

Let’s look at the three basic reasons why your card won’t work:

1. Physical card/card reader function problems
2. Your purchase is being declined by the credit card company
3. Authorization/communication issues

Let’s look at the first reason.

Credit card strips get worn, as do card readers. In this case you may need a new credit card or the merchant may need a new card reader. One or the other is physically shot and must be fixed or replaced.

Which one? You don’t know. Yet you will know that one of them is faulty when, upon calling your credit card company, the rep tells you that the transaction you just attempted did not go through as opposed to telling you that the transaction was ”declined”.

If there is no problem with the rep approving the charge and you suspect that your card is worn and needs to be replaced, ask for a replacement card while you have the rep on the line checking out the bad swipe.

While a bit of a nuisance, this is an easy fix.  

(Should your card be relatively new and unlikely to be the culprit, you might suggest to the merchant that the card reader be fixed or replaced.)

Should the second scenario be your situation, and your credit card company tells you that the charge was declined, be sure that your card was not swiped more than once by mistake and it is not multiple swipes (and multiple charges) that have resulted in a final decline of the last swipe.

Multiple swipes, if not removed, can result in your card not working anywhere by taking your account over limit.

If the reason is not multiple swipes, then you, yourself, may have exceeded your credit limit, neglected to make a payment, or have some other problem with your account that requires action on your part to make it right or bring it current. Yet you will not know unless you call in.

The third scenario – authorization problems – can involve other internal, technical glitches in the software used by a credit card company. It can involve errors made in coding an account. There are many reasons for authorization problems and they vary in complexity. Some are very easy to fix. A few are more difficult, time-sensitive, and need to be dealt with immediately to avoid more problems with the account. 

These problems can snowball so your first response must always be to call in right away. Do not speculate on the cause or dismiss it as trivial. It could or could not be. And do not blame the credit card rep because it’s unlikely he or she had anything to do with it. 

In summary, allow your card to be swiped only once for any purchase. Should it not go through, call your credit card issuer right then to find out why and get it straightened it out. You will very likely save yourself multiple hassles down the road. 

In previous posts I’ve written about how the blame for balance transfer messes can often be equally shared between customers, agents and credit card companies. Yet, when it comes to why your credit card will not work, no human culprit can usually be identified. It is more likely to be a problem with technology. For instance, consider the following situation.

Let’s say that you’re in a restaurant. You’ve eaten your meal and handed your card to the waitress. She returns and quietly informs you that your credit card has been turned down.

“What!! There should be lots of credit on that card,” you cry in disbelief. Scrambling for your cell phone, you immediately phone your credit card company.

That instinct to call in is the right one to follow.

Do not argue. Do not ask that the card be swiped again. Do not pull out another credit card.

Forget defending your honor as someone who pays his bills. Credit card purchases are declined all the time, often by mistake or due to technical glitches. It’s nothing personal. Technology does not always work. So just call and report it.

Yet what do you do when a merchant is swiping your credit card through the card reader in front of your eyes and she comes up with a decline?

There may be a tendency to wait for a cue from the merchant as to what to do. Yet the first instinct of a clerk is usually to think, “Maybe I did it wrong,” and swipe it again.

Although predictable and human this is the wrong instinct in this situation.

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What do you do if an Internet purchase doesn’t go through? Do you give up? Do you assume the charge did not go through since you did not see a confirmation page or receive a receipt?

No. Assume nothing. Plus, if you still want the item or service, you can buy it through what is called a “voice authorization.”

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I’ve been reading blogs by financial advisers who advocate eliminating credit cards as a means of making purchases. They argue that consumers should either pay cash for everything they purchase or use a debit card instead.

Certainly I’ve encountered customers who should not have or use credit cards. They tend to be people who lack basic organizational skills, people who cannot keep track of due dates and/or lose their bills so that they wind up paying late or over limit fees time and time again. 

Yet these folks are pretty rare. 

For most of us – and certainly for millions of people trying to run a business – the credit card payment method is a necessity. There are just too many things that you cannot buy without a credit card. Plus the combination of convenience and saved time is something that those who are able to organize their finances effectively are unwilling to give up. Certainly no business person can afford to give up a tool that enables him to better conduct his business.

I speak with business customers every week who cannot do without a credit card for even a single day. It is an effective tool that helps them meet the needs of their businesses and their customers. Need something shipped overnight? The only way it can be done is to guarantee payment instantly, as is done with a credit card.

As to using a debit card instead?

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With registration for the election just days away in some states, here’s a video urging you not to bother…

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Great News! Thanks to public support, HR 5244 passed in the U.S. House of Representatives. Now it goes to the U.S. Senate.

Since Congress is set to RECESS in 3 DAYS your Senators need to hear from you NOW.

Make sure they schedule this for a vote and pass it. There isn’t any U.S. consumer with a credit card who will not benefit from this bill becoming law.

Again, to make things easy, Credit Card Reform.Org has a web page from which you can e-mail a letter to your Senators.  

From their site:

“We think a deal should be a deal. And a big Wall Street bailout must include changes that will actually help ordinary Americans. This is one small but important step in that direction. 

If you have friends and family with credit cards, please forward this message on to them. Only a few days remain to get this bill passed before Congress adjourns for the year, and we need all the consumer voices we can get to counter the big banks and credit card companies, who want to keep their unfair advantages.”

When you think about what credit card companies do, it’s outrageous. You take out a loan at one rate, say 15%, and yet that rate can be raised to anything: 18%, 21%, 27%, 33%, with only 15 days notice and for no good reason except the borrower is “a bad risk.” 

Of course he’s a bad risk! How is he going to make ends meet when his debt is growing by 33% a year?

And, make no mistake, there are Americans whose credit card interest rates are above the thirtieth percentile!

They are, typically, the poorest among us. Yet how is it that those among us who are the poorest, and who have the least, tend to be charged the most for everything?

It’s just wrong.

POSTSCRIPT FOR YESTERDAY’S POST:

I’ve been thinking about Bert Ely’s comment about the mortgage melt-down problem being “an oversupply of housing” and I think that’s false.

If we have more houses than we need, then why have housing prices gone through the roof so no one can afford a mortgage?

It hasn’t been because there are “too many” houses.

On the contrary, since we live in a “supply and demand” economy, high housing costs would indicate that we do not have enough houses to meet the demand. Or not enough NICE houses to meet the increase in population. Because – as everyone knows – when the market is glutted with supply, the price goes down.

Certainly if Bert-o had ever stepped into some of the shacks that very poor Americans live in – remember the photos from Katrina and how so many were shocked at the poverty – he wouldn’t dare say that we have an “over supply” of housing.

Yet he’s a banking consultant, so what can we expect?

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It’s old news already that President Bush has announced an unprecedented bailout of private financial institutions¹. My husband smiled and said:

“Bear in mind that this is, supposedly, a ‘conservative’ president who believes in ‘free trade’ and ‘free market forces.’ In another time and place, the Republicans might be calling this bailout a brand of ‘socialism’ or the federal takeover of Freddy Mac and Fannie Mae ‘communism.’ Yet he sees no inconsistency. He just calls it ’capitalism’.”

The fact is, President Bush and the GOP only like to let “market forces” rule when it’s the little guy’s family that goes on the skids, not the big boys on Wall Street.

Truth be told, no one will benefit from total financial collapse, least of all the poor and middle class. So something does need to be done.

Yet am I the only one who finds it ironic that the federal government is now going to take over all the bad debts of these financial empires?

No one takes over the unmanageable debts of the poor stiff who’s working two jobs, living from paycheck to paycheck and gets in over his head with credit card debt after his credit card company raises his rate at will.

Bottom line, President Bush and the GOP have always practiced corporate welfare – while trying to kill any program that might help working class families – so this is really nothing unexpected.

Also, don’t get me started on how many articles have been written blaming the poor stiffs who had the gall to want to own a home.

“FOR SHAME! How dare you try to buy a home on minimum wage? YOU should have known better. Now YOU are bringing down the whole economy, you worthless scum! The bankers are just poor victims.”

Sadly, from the blog posts I’ve seen a number of people really seem to believe that.

But I digress.

This post is supposed to be a follow-up to my post about urging Congress to pass HR 5244, otherwise known as the “Credit Card Bill Of Rights Act of 2008.” 

A mere 50,000 people sent e-mails to their representatives demanding that this bill be passed. (It should be fifty million.) Now congressional representatives need to get phone calls – today and all this week – to get this thing passed.

LAWMAKERS ARE HEARING FROM THE BANKS. They need to hear from you. TODAY.

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