Pending Authorization
Pending Authorization refers to a temporary hold placed on a portion of your credit card’s available credit when a transaction is initiated but not yet fully processed or posted to your account. This is evaluated within Credit Card Mechanics.
Plain-Language Meaning
This term describes the period when a credit card transaction has been approved by the card issuer but has not yet been finalized or posted to your account balance.
Practical Example
If you use your credit card to pay for a meal at a restaurant, the amount may show as a pending authorization on your account until the restaurant finalizes the charge, at which point the transaction will post and the hold will be removed.
What It Does Not Mean
Pending authorization does not mean the transaction is fully completed or that the funds have been permanently deducted from your account; it is only a temporary hold until the merchant finalizes the transaction.
How the System Uses It
The system uses pending authorizations to reserve part of your available credit for transactions that have been approved but not yet settled. This ensures that the funds are available when the merchant completes the transaction, and helps prevent overspending beyond your credit limit.
Common Misconceptions
- “Pending authorization means the transaction is final.” The transaction is not final until it posts to your account.
- “Pending authorizations always match the final charge.” The final posted amount can differ, especially with tips or adjustments.
- “Pending authorizations reduce your statement balance.” They only affect your available credit, not your statement balance, until the transaction posts.
Related Pages
Related Glossary Terms
FAQ
- How long does a pending authorization last? A pending authorization typically lasts from a few hours up to several days, depending on the merchant and your card issuer’s policies.
- Can a pending authorization be canceled? A pending authorization usually cannot be canceled by the cardholder, but it will automatically drop off if the merchant does not finalize the transaction within a certain timeframe.