Credit Card Denied? This Could Be the Reason

It doesn't necessarily mean you've surpassed your spending limit.

I come from a family of teachers and recognize that educating children is not only an important job, but a difficult one. That's why I try to be as helpful to my kids' teachers as possible. And that generally means volunteering to be the class parent.

When you're the class parent, it's on you to round up other parents to bring in classroom supplies and to send out sign-up sheets for holiday parties. It's also your job to collect money for a class gift during the holidays.

The latter is something I'm truly happy to do, and normally, I pool those funds and use them to buy gift cards. While some might say that gift cards are impersonal, I'd rather give my kids' teachers the option to spend money on something they'll really love. And while I'm perfectly capable of picking out a cute mug, vase, or platter, let's face it -- the typical teacher would rather have the equivalent of cash.

This past December, I found myself loading up on gift cards to hand out to my kids' teachers on the last day of school before our winter break. But something frustrating happened to me at the checkout counter. After activating five or six out of 12 gift cards, my credit card was declined. But there was a good reason for it.

When fraud alerts kick in

Years ago, I had a credit card of mine declined because I'd managed to reach my spending limit. Thankfully, at the time, I had several other cards I hadn't maxed out, so the situation was salvageable.

This time around, I knew I was nowhere close to my credit card's spending limit. See, I tend to check my credit card balances on a weekly basis -- and I do so even more frequently during periods when my spending is up, like the holiday season. So I knew full well that I had thousands of dollars' worth of buying power before reaching my credit card limit.

Rather, the issue at hand was suspected fraud. Often, when criminals get a hold of a credit card, they'll use it to buy gift cards because those can double as cash, and because they're easy to walk away with and use up quickly.

Say a criminal buys a $500 gadget on a stolen credit card and orders it to be shipped to their home. If that fraud is discovered several hours later, that purchase can be canceled.

Gift cards, on the other hand, are something you can buy on the spot. So it's easy to see why they're a prime choice for crooks.

As such, it made sense that my credit card was denied after a series of gift card purchases. And thankfully, all I had to do was get in contact with my credit card company and explain that the charges weren't fraudulent. I did hold up a line of annoyed customers behind me while I sorted things out. But alas, these things can't be helped.

Be careful when buying gift cards

Buying a single gift card generally won't trigger a fraud alert on your credit card. But buying a series of gift cards might. So the next time I'm tasked with doing so, I'll probably make a note to reach out to my credit card issuer and let them know my plans ahead of time. That might spare me the hassle of having to address a fraud alert while I'm out doing my shopping.

Meanwhile, my kids' teachers were super appreciative of the gift cards they received. So while I won't be winning the award for most creative class parent anytime soon, I still think I made the right call.