Do You Have to Pay Pending Charges on a Credit Card?
Gain clarity on credit card payments. Understand when transactions are final and your financial obligation begins.
Credit cards offer a convenient way to manage daily expenses and larger purchases, providing flexibility in financial transactions. Understanding how these transactions are processed is an important aspect of effective financial management. A clear grasp of the different stages a transaction goes through helps individuals monitor their spending and maintain a healthy financial standing.
Understanding Pending Charges
A pending charge on a credit card represents an authorization hold placed by a merchant. This is a temporary reservation of funds to ensure money is available for a future transaction, rather than a finalized charge. Merchants use these authorization holds as a preliminary step in the payment process, verifying the card’s validity and the availability of funds before the actual transaction is settled.
Common scenarios for pending charges include gas station purchases, where a fixed amount might be authorized before the final amount is known. Hotels and car rental companies frequently place authorization holds to cover incidental expenses or potential damages. Online purchases may also show as pending until the merchant processes the payment and ships the order. Typically, a pending charge clears within one to five business days.
Impact on Your Credit and Statement
Pending charges immediately affect a cardholder’s available credit. When a merchant obtains an authorization, the amount of the pending charge is typically deducted from the card’s credit limit, even though the funds have not yet been transferred to the merchant. For instance, a $30 pending purchase on a card with a $100 limit would reduce the available credit to $70. This immediate reduction helps prevent overspending.
While pending charges impact available credit, they do not yet appear on the official monthly billing statement. Instead, they are usually visible on online banking platforms as “pending transactions” or “holds.” These charges are not included in the current balance that determines the minimum payment due or interest calculations. The transaction only becomes a part of the official billing cycle once it has “posted” or “cleared.”
When Payment Obligation Arises
A cardholder’s obligation to pay for a credit card transaction arises only after the charge has officially posted to their account. This means the transaction must appear on the cardholder’s official billing statement. Credit card billing cycles typically last between 28 and 31 days, and at the end of each cycle, the credit card issuer compiles all posted transactions into a statement balance.
The payment due date for this statement balance is usually set approximately 21 to 25 days after the billing cycle ends. Only the posted charges included in this statement balance require payment by the due date. Pending charges do not contribute to the current statement balance and do not require payment until they transition from pending to posted. Federal laws, such as the Fair Credit Billing Act (FCBA), provide a framework for consumer protection related to billing errors and credit card practices.
Addressing Pending Charge Issues
If a pending charge remains on an account for an unusually long period, appears incorrect, or is for an unrecognized transaction, the first step is to contact the merchant directly. Merchants have the ability to release or correct authorization holds. It is helpful to have details such as the transaction date, amount, and any order numbers ready when communicating with the merchant. Documenting all interactions, including dates and names of individuals spoken to, can be beneficial if further action is needed.
If direct communication with the merchant does not resolve the issue, or if they are unresponsive, contact the credit card issuer. While credit card issuers generally handle disputes for posted charges, they can offer guidance regarding pending transactions. Formally disputing a pending charge with the card issuer is often not possible until the charge has posted to the account. However, the issuer can still provide information and advise on the appropriate course of action, which may include waiting for the charge to post before initiating a formal dispute process.