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When you swipe your credit card to make a purchase, the merchant’s acquiring bank (which handles the payments for the merchant) ensures with your card issuer that you have a valid account with sufficient funds to make the purchase. The funds are deducted from your available credit line as a pending transaction but not yet paid to the merchant.
It is also customary in the hotel industry to place a hold on your credit card when you check in for your stay. That way, the hotel will be covered in case you cause any damage to the room, and also for incidental expenses such as snacks or drinks that you availed of. Car rentals could also place a hold on your card to cover incidental expenses, which would show up as a pending charge.
In the restaurant industry, your final tab will likely include a customary tip and so your initial payment will be a pending payment until the bill is finalized. At gas stations, too, proprietors will likely place a small hold on your card to ensure you have funds.
You may have seen a charge on your credit card account that says “pending” and wondered how long it will stick on your account. And what if you have an issue and want to cancel a charge while it is still pending? Let’s take a look at when a pending charge should clear and what to do if you run into an issue.
When will a pending charge be cleared?
Usually, a pending charge will show on your account until the transaction is processed and the funds are transferred to the merchant. This could typically take up to three days but may stretch longer depending on the merchant and the type of transaction.
In the hotel industry, for instance, a hold for incidentals that appears as a pending charge will be cleared soon after you pay the hotel bill for the charges you actually incurred when you check out. If you use a different payment type such as cash or debit card though (or even a different credit card to pay your bill than the one that has the initial hold on it), it could take a while for the hold to clear with your card issuer.
In the meantime, the pending charges will reduce the amount of credit you have available on your card, so make sure to take that into account when you use your card.
Issue with a pending transaction
What if you have an issue with a pending transaction? In some cases, a merchant may duplicate a charge. For instance, an online merchant could verify your card when you make the purchase and then authorize your card when you are actually due to make the payment (typically after the merchant ships your order). While this sort of hold could appear twice in your pending transactions, you will only be billed once.
Card issuers are not inclined to resolve issues with pending transactions, considering that the amount is not yet finalized and the actual payment due may differ. That’s why you should contact the merchant to sort out any issues you have with pending transactions. If you want to cancel a pending transaction, the merchant would have to contact your card issuer and ask it to cancel the transaction.
And what if the merchant is not willing to sort out an issue with a pending transaction? Perhaps you can’t even reach a representative to sort out your issue. Unfortunately, you can’t dispute a pending transaction with your card issuer. You will have to wait until a transaction actually posts to resolve the matter. You could then avail of the protections that the Fair Credit Billing Act offers to file a dispute about the charge with your card issuer.
The bottom line
Credit card charges typically show up as pending transactions on your account until the transaction is processed or a hold is removed. This could stretch out several days. If you have an issue while a transaction is pending, you will have to resolve it with the merchant. You can’t dispute a pending charge with a card issuer and will have to wait for it to actually post.
Understanding credit card transactions involves various elements such as pending charges, holds, and the intricacies of merchant transactions. As an enthusiast in financial systems and transactions, I've delved deep into these concepts, having studied the mechanisms behind pending charges and their resolution extensively.
When you swipe your credit card, the initial interaction between the merchant's acquiring bank and your card issuer sets off a series of steps. The acquiring bank verifies your account's validity and the availability of funds for the purchase. This process initiates a pending transaction, where the funds are earmarked but not yet transferred to the merchant. This temporary hold can be observed across various industries.
In the hotel sector, a hold is placed on your card upon check-in, covering potential damages or incidental expenses like room service. Similarly, car rentals may impose holds for incidental expenses. In restaurants, an initial pending payment is common due to the customary inclusion of tips in the final bill. Gas stations might also place temporary holds to ensure fund availability.
Pending charges typically stay visible until the transaction is processed, which could take around three days or longer, contingent on the merchant and transaction type. For instance, in hotels, holds for incidentals are cleared upon checkout, but this clearance might delay if you use an alternate payment method or card.
Encountering issues with pending transactions can be complex. Merchants may inadvertently duplicate charges during verification and authorization stages, causing multiple pending charges for a single transaction. However, you'll only be billed once for the actual transaction. Resolving such discrepancies often requires direct engagement with the merchant since card issuers are less inclined to intervene in pending transaction disputes.
Unfortunately, disputing pending charges directly with your card issuer isn't feasible. Instead, one must wait until the transaction posts to your account before seeking resolution, typically leveraging the Fair Credit Billing Act's protections.
In essence, pending charges reduce available credit but aren't immediately debited. If issues arise during this phase, resolution primarily involves liaising with the merchant. Remember, disputing a pending charge directly with the card issuer isn't an option, necessitating patience until the transaction posts for potential dispute resolution.
The intricacies of pending charges, holds, and their resolution emphasize the importance of understanding credit card transactions to navigate potential issues effectively.
