How does it work? By making it more difficult to read the card …
How Does a Plastic Bag Fix a Buggy Credit Card?
Reader Amanda writes, “I was a cashier for a few years and when the register wouldn’t read a credit card, we would wrap the card in a plastic bag and run it through again and it would work. What makes…

I just figured it was hoodoo and stopped thinking about it.
I never put a card inside a bag, but I did use plastic bags to rub on the magnetic strip if it wasn’t working. That usually did the trick too.
Don’t have this problem – we have Chip and Pin. I am sometimes surprised at how out of date the US banking practices are.
It struck me when I was in Glasgow a few weeks back how many places expected to use embedded chips in the cards. In fact, one restaurant server was actually confused that my card required swiping.
Not sure why that hasn’t become more the rule in the US. Some cards have it, but I’d say the majority do not. Unsure if it’s a cost issue (on the card or the reader side), an already-present saturation of swipe readers, paranoia about chips, or what.