Pending vs Approved Credit Card Charges

Sometimes when you make a purchase using a credit card, in your online account you’ll temporarily see a charge different than your purchase amount or you’ll see two charges for the same purchase. What’s going on? Are you being charged incorrectly?
More often than not, you’re simply seeing a pending charge which also know as an authorization hold or a card authorization. When you swipe or submit your card for payment, the merchant’s processing system verifies that your account is valid and that sufficient funds are available to cover the transaction cost. At this point, the funds are “held” and deducted from your credit limit or bank balance, for a debit card, but are not yet transferred to the merchant. The merchant then clears the transaction (also called settlement), or the hold “drops off” and makes the balance available again. At the end of the day, the merchant instructs the credit card machine to submit the finalized transactions to the acquirer in a “batch transfer.” This begins the settlement process in which the funds are transferred from the customer’s accounts to the merchant’s accounts. This process is not instantaneous (although many believe it is). The transaction might not appear on the customer’s statement or online account activity for a day or two, and it can take up to three days for funds to be deposited in the merchant’s account. Sometimes, transactions show as pending charges because the purchase was made after 8:30 p.m., and the transaction will resolve the following day.
For debit cards, if not settled by the merchant authorization holds can fall off the account from one to five days after the transaction date, depending on the bank’s policy. For credit cards, pending charge holds can last as long as 30 days, depending on the issuing bank.
Pending transactions do count against your available credit, but are not counted as part of your outstanding balance. For instance, even if you have no approved charges on your monthly statement, and a credit card balance of $0, a pending charge of $100 would still count against your credit limit. Unless your credit card accepts prepayments, you may not be able to pay pending charges when you pay off your credit card balance. Paying a pending charge would be considered prepayment because final amount billed may change. The pending charge isn’t included in your balance, so it isn’t actually a debt yet.
When a merchant swipes a customer’s credit card, the credit card terminal connects to the merchant’s acquirer, or credit card processor, who
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