What Does Pending Transaction Mean for Credit Cards and How Long Does It Take to Clear?
When you swipe your card at a store, where does the money go? This isn’t a riddle. When you make a purchase with your credit card you begin the transaction process, but it doesn’t stop there.
Credit transactions take complex, behind-the-scenes actions in order to withdraw funds from your account and transfer them to the merchant’s. It’s important to know a little bit about this process to successfully track your purchases and budget your finances.
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What Is a Pending Transaction?
A pending transaction occurs when you use your credit card for a purchase but the funds haven’t quite transferred over yet. This can happen with larger purchases, or if a merchant just hasn’t completed their transactions yet.
Sometimes, transactions show as pending because the purchase or payment was made after 8:30 p.m., and the transaction will clear the following day. Pending transactions usually show as the same amount your purchase was, but they can sometimes look like random $1 charges.
Random $1 Charges
Have you noticed a random $1 charge on your statement? It usually shows up mixed in your pending transactions. These charges could be a merchant verifying funds for purchased goods, or it could be a scammer.
Usually, these $1 charges are nothing to worry about. They come from gas stations, hotels, and rental car companies and they are used as temporary preauthorization from your credit card company. The $1 charge keeps merchants from having to place a larger hold against your account.
The charge will disappear when the final amount of your transaction is no longer pending. The dollar is never taken from your account. However, if these random $1 charges don’t disappear or start popping up on your final credit card statement, contact your card issuer immediately and find out what’s going on.
Are Pending Transactions Included in Available Balance?
This can be confusing, because pending transactions do count against your available credit, but are not counted as part of your outstanding balance. For instance, even if you had no approved charges on your monthly statement, and a balance of 0, a pending charge of $100 would still count against your credit limit. Depending on your credit card’s terms and conditions, you may not always be able to pay pending charges when you pay off your credit card balance. Because they are pending (and the final amounts may change), making a payment to cover pending charges is a prepayment. Again, the pending charge doesn’t factor into your balance, so it isn’t actually a debt yet.
Dispute Pending Charges
If a pending transaction or a random $1 charge shows up on your account statement, but you know it wasn’t a purchase you made, you might need to dispute the charge. Follow these steps to dispute a credit card charge:
- Notify your bank or card issuer as soon as you notice an unauthorized charge.
- If there’s a simple mistake, like an incorrect amount, contact the merchant and ask them to fix it.
- File a formal complaint with your bank and a police report if the transaction is fraudulent.
- Keep checking in with your bank or card issuer on the status of your dispute.
You will be notified that your dispute was either denied or approved. If the dispute is approved, the charge will be reversed or refunded to your card and no interest will be charged on that purchase. If denied, you will receive an explanation letter.
How Long Do Pending Transactions Take?
When you have a pending transaction because the merchant or retailer hasn’t completed their transactions yet, it could take up to five days to clear. But pending transactions will affect your available credit immediately, even if they aren’t reflected in the current balance until they clear. You won’t be charged interest for pending transactions until they are approved.
Keep in mind that pending transactions work both ways. While it usually reflects a purchase, making a credit card payment after 8:30 p.m. on the day your bill is due will result in a pending transaction that won’t clear until the following day. This could result in a late fee so it’s best to pay your bill as early as possible.
Tylene is a freelancer in Boise, Idaho. She's a self-taught personal finance hacker with zero debt. She eats avocado toast for breakfast.
This post was updated February 28, 2019. It was originally published October 12, 2018.