Jessica Simpson's Credit Card Was Declined at Taco Bell. Here's How It Could Happen to You, Too

Credit card issues happen to all of us.

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 again, we're shown that even celebrities have their own money woes.

Take Jessica Simpson, for example. The ex-popstar recently joked with the hosts of The Real about the problems she's had due to putting her money into her business.

"I am draining my bank account. I have no working credit card," she said, adding, "I went to Taco Bell the other day and my card got denied."

While she may be able to make light of it, having a card declined is no laughing matter for many of us. Not only is it potentially embarrassing -- especially if you wind up holding up 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. Having a card declined doesn't necessarily mean you're in financial trouble. There are a number of reasons for a card to be declined, and many of them have nothing to do with your balance. Here are a few reasons it could happen to you.

1. The transaction was flagged as fraudulent

This is actually an extremely common -- if not the most common -- reason 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's outside your normal transactional behavior, there's a decent chance the algorithm will flag it as fraud. At best, this means you'll get a text message or email alert telling you a questionable purchase was made. At worst, your transaction will be declined and you'll have to call the issuer to clear things up before you can make your purchase.

2. You traveled without alerting your issuer

This one is similar to the first point about fraud. A lot of credit card fraud occurs in foreign countries, so an easy way to stymie that type of fraud is simply to flag any point-of-sale transaction from outside the U.S. as fraud. So, if you travel outside the country without alerting your issuer, your credit card transactions may very well get flagged.

The best way to avoid this? Give your issuer a head's up before you travel. Most banking apps these days let you 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 won't rot or go sour, it does expire. Issuers will typically send you a new card at least a few weeks before your old card expires, but you may still end up trying to swipe an out-of-date card without realizing it.

The simple fix here is to activate new cards as soon as you get 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 a glitch in the machine or communications system

Every credit card system relies on multiple levels of technology to function. But as helpful as technology can be, it's hardly perfect. If there's a technical problem with the credit card terminal, your card can be declined or may not read correctly.

And the same thing applies if there's a glitch in the communication between the terminal and the card network. There could even be an error on the issuer's end with verifying a transaction. Really, if any part of the system has a problem -- it all has a problem.

5. You're over your credit limit

This list wouldn't be complete if we didn't include this reason. Yes, you can definitely have your card declined while trying to make a purchase if you are over your credit limit. In some cases, you may also be charged an over-limit fee by your issuer.

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 to my own score for having a high balance reported on my card.

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