As instantaneous as spending with a credit or debit card feels, the process of transferring your money from your checking account or from the credit card company to the merchant takes time. After the payment has been submitted by the merchant and authorized by your card issuer, it becomes a pending transaction. You can find a pending transaction at the top of your most recent card statement online or at the top of the list of withdrawals and deposits to your checking account. To help differentiate pending from completed transactions, they may appear in gray.
Once your credit card issuer or credit union has transferred the money to the merchant, the transaction will be finalized and posted to your account. Usually, transactions post within three to five days, but it can take longer for larger amounts or if it’s an international purchase.
It’s important to know that, even while a charge is pending, it will affect your total available balance on a credit card. If you plan on making a large purchase with your credit card part-way through a billing cycle, be sure to subtract any pending transactions from your credit limit. This will prevent you from attempting to spend over your credit limit and possibly having your card declined at check-out.
Preauthorization charges
Have you ever looked at your credit card statement and seen a pending charge that’s larger than the purchase price for something? That’s called a preauthorization charge, and they routinely happen for hotel reservations, car rentals, and gas purchases. Gas stations often put a larger pending transaction on your account to make sure you have enough money to pay for a full tank. But don’t worry, when the transactions posts, you will only be charged for the gas you purchased.
Hotels collet a deposit up-front to cover any incidental charges or damage to your room. After you leave, they will refund the deposit, minus any incurred charges. If you made no additional charges and didn’t damage the room, the additional pending transaction amount won’t post and you won’t pay it. A similar process happens with car rentals.
Debit card
Pending transactions on your debit card, and thus on your checking account, will limit access to money in your account. If you are spending within your budget, this shouldn’t be much of a problem, as you only spend money that you know you already have. However, if you have several preauthorization charges like the ones listed above, this can make it look like you are spending more than you have and create problems if you need to spend that money being held to pay for other bills. To avoid this, take into account preauthorization charges when making your budget around travel or other large purchases.
How to cancel a pending transaction
Credit card issuers don’t have the ability to cancel pending transactions until they’ve been finalized. If you need to eliminate a transaction before then, contact the merchant who placed the charge because they have the ability to ask for the hold to be released. Alternatively, you could ask your credit card company to increase your credit limit. This would free up funds you expected to have access to.
Some card issuers allow cardholders to cancel pending transactions online through their account.
Fraud and disputing charges
If you see a pending transaction on any account that you don’t recognize, contact your card issuer immediately. It could be fraud. They will be able to monitor the transaction, tell you if the merchant goes by any other business name (in case you did make the purchase but didn’t recognize the name), protect your privacy, and remove your liability to pay the charge once it posts.