How Long Can a Credit Card Company Hold Your Payment?


Person checking online payments on his mobile application

Credit card companies are financial institutions like banks and credit unions that issue credit cards to individuals, including business proprietors. Like banks, these institutions play a crucial role in the processing of credit card transactions. Contrary to what some of us believe, credit card transactions don’t post in real-time. In other words, payments associated with a credit card transaction are usually held by the card issuer. And when such happens, you may want to know how long it will last.

A credit card company usually holds credit card payments for up to five days. A hold is usually placed on such payments to give the parties involved in the transaction time to conduct the necessary checks and approval.

Credit cards offer individuals better protection against frauds, thus, a reason why it is widely used to make transactions. Mind you, transactions made with credit cards are usually held. The hold is necessary to ensure that you have sufficient funds or check if you made the transaction outside of your issuer’s business hours. If you’ve ever experienced a hold on a credit card payment you made to a merchant, you may have questions. Fortunately for you, I’ll be providing you with detailed information that’ll help you understand how long it lasts.

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How Long Can a Credit Card Company Hold Your Payment?

The advent of credit cards has made life a little easy for several individuals. Of course, some of us may argue that debit cards are way better than credit cards because it doesn’t rope us in debt. However, worthy of note is that credit cards aren’t that bad, provided you don’t default on your debt. In fact, when it comes to making online transactions, credit cards are your best bet, and this is because they offer protection against fraud.

Credit and debit card transactions are processed almost similarly. And mind you, the fact that these transactions occur electronically doesn’t mean they happen in real-time. When I say real-time, I mean these transactions don’t post immediately. Instead, they undergo several processes usually handled by about four players: the cardholder, merchant, Credit Card Company or card issuer, acquiring bank, including the credit card associations.

Knowing how a credit card transaction is processed will help you understand why credit card companies usually pend your remittance. And mind you, these companies cannot suspend your remittance forever. After the merchant and all the parties involved have done all they need to do, the pending tag you see when you log into your online banking will drop, and the transaction will post. In other words, the merchant will receive the money for the product that you paid for.

Let’s take a sneak peek into how a credit card payment is processed.

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How Are Credit Card Transactions Processed?

When you swipe your card at a grocery store or a hotel, the merchant collects your payment information. Afterward, your payment information is sent to the credit card processor, who then transfers it to your credit card network (VISA, American Express, MasterCard, etc.).

The process doesn’t end there. Next, your remittance information is passed on to the credit card company, whose job is to verify if you are in good standing with them. If you aren’t, the transaction won’t go through. However, if you are, the transaction will proceed to the next phase.

It is the job of your bank, Credit Card Company, or whoever issued the credit card to you to run security checks to ensure that the transaction is legit. Some of these checks are usually carried out to ensure that you and not someone else authorized the transaction. After all the checks have been conducted, the credit card company will deposit the funds associated with the transaction into the merchant’s bank.

The next phase is the settlement process, and this process can take several days depending on the card network involved. You see, these processes don’t happen in an instant. Neither do their take a day. Remember, you aren’t the only one purchasing with your credit card. There are a lot of other credit card transactions waiting to be processed. For this reason, amongst others, a hold is usually placed on your remittance until all the checks and approval are done.

So now, back to the question, “How long can a credit card company hang your payment?’ With the illustration above, I guess you should have a little insight into the duration of the hold.

You see, credit card companies may hang your payment for five days pending when the transaction is processed and posted into your account. However, you should note that this time may vary slightly as each credit card company operates differently. If you are eager to know the precise time, you can contact your credit card company. But have it in mind that other players have a role to play in how long such a hold will last.

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What Does It Mean When a Credit Card Company Holds Your Payment?

Some of us have been using credit and debit cards for a while now, so we have a good understanding of some of those essential terms regarding a credit card transaction and processing. We know that credit card transactions don’t post in real-time. We are also aware of some of the players involved in processing a credit card transaction. On the other hand, we have the newbies and those who are ignorant. Unfortunately, these individuals don’t know what it means when a credit card company holds payment.

When a credit card company hangs your remittance, you’ll notice a pending tag on your banking app. Your available balance will also reduce, and the funds associated with the transaction will be displayed in your pending balance. This is an indication that the payment is yet to post.

The act of credit card companies pending a remittance is a common practice. Holds are usually placed on remittances for several reasons. And one of those reasons is to ensure that you have a sufficient amount of money to perform the transaction. The hold will be released after a few days, and you will know when it does when you log into your online banking.

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