How long do pending transactions take to expire?

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how long do pending transactions take to expire

With up-to-the-second access to our bank information in our pockets, most people see a pending transaction on their statement from time. But what exactly does that mean, and when will it disappear? 

In most cases, pending transactions will be gone in a day or two, but there are some situations that cause them to linger, and this article will take a closer look at all things relative to pending transactions on your credit or debit cards. 

What is a pending transaction?

A simple answer to this question is that a pending transaction is a transaction that has not been fully processed yet, but there are several causes for this, so the definition needs to be a bit broad as far as how long pending transactions take to expire.  

Ultimately, pending transactions are a product of increased security measures to prevent credit card fraud. When your card is run by a merchant, it is simply making a quick confirmation with your bank that your account is, indeed, yours and that it has sufficient funds for a given purchase. 

According to a 1999 report conducted by the U.S. Department of Treasury, check fraud cost the U.S. economy more than $1 billion over an 18-month period between 1996 and 1997, and that fraud was a big catalyst for moving towards credit cards, which protect both consumers and merchants. 

Pending charges on credit cards and debit cards are simply an extension of the fraud protection offered to merchants by using plastic rather than checks. While there are several kinds of credit card fraud, the equivalent to “writing a bad check” is a lot more difficult to do thanks to pending transactions.

How long can a transaction be pending?

Most transactions remain pending for less than 5 days, though some institutions ask their card holders to allow up to 7 days for one to process. Most merchants will clear their purchases at the end of each business day, but if you have a pending transaction for a few days, it normally means the merchant just hasn’t fully processed your purchase, or that a purchase was subjected to further review. 

After the merchant’s set time period is over, the funds will be returned to your account. Laws are in place to ensure they do this in a quick manner, and failure to do so can result in “misuse fees” from both financial institutions and governmental bodies.

Certain purchase types do have longer processing periods (to allow for time to add additional purchases, like a room service bill. A few common examples here:

  • Hotel reservations: up to 28 days
  • Car rentals: up to 28 days
  • Flights: up to 20 days

However, your available balance will still reflect the approved purchase amount as being unavailable while pending. 

Merchant holds on debit cards

Merchant holds are put on funds to ensure they are available even if a purchase hasn’t been officially made yet. To use the “bad check” metaphor again, it’s simply a modern solution to protect vendors and ensure a purchaser actually has the money they need to buy something.

Most merchant holds will be removed at the end of a given business day, but they do sometimes take a few days, and things like weekends and holidays can affect this, too. If your pending transaction disappeared and funds were returned, it’s either your lucky day, or the merchant was unable to deliver the goods or services agreed upon.

Bank holds

Bank holds, also known as administrative holds, are placed on your account by your financial institution, generally to avoid overdrafts. Some common reasons for bank holds include:

  • Late payments on credit cards
  • Low balances on checking and savings accounts
  • Unusual activity on an account
  • When merchants file payment disputes

Credit card transactions

Credit card transactions clear faster than debit payments or holds, as a simple internet connection allows a consumer to swipe, the merchant’s bank to confirm that the line of credit exists, and the credit company to approve the transaction. The “real” consumer payment will be made at a later date when they make a credit card payment. 

Generally, credit card transactions take less than 48 hours to clear due to the regularity of the purchaser, who is technically the credit card company.

Can a pending transaction expire?

A pending transaction can expire, and if your purchase was something concrete, you can thank your lucky stars for whatever mistake was made on the merchant’s end. On the bad side, a pending transaction may expire due to a change in fund availability, and a less-tangible purchase (like a Netflix subscription, for instance) may be canceled. 

Except in select cases generally involving travel, pending transactions will expire in less than a week. 

What happens when a pending charge expires?

A pending charge is more or less a confirmation of availability of funds. If the merchant never pulls the trigger on actually accessing the funds available to them, the charge expires and the amount is returned to the bank or credit account. 

Why does it take so long for a pending transaction to clear?

Even with domestic business, there are several different options financial institutions can choose to transfer their electronic funds. The ACH, or Automated Clearing House, is the commissioning body on electronic transfers.

The reason it can take some time for a pending purchase to clear is that every purchase is subject to review from three different entities:

  • The merchant’s bank
  • The consumer’s bank or creditor
  • The ACH

Can I cancel a pending transaction?

Not by yourself, is the quick answer. Generally a merchant has to be the one to cancel a pending transaction, so reaching out to them should be your first step. If there is a dispute, however, you can contact your financial institution to go to bat for you regarding the issues with the transaction. 

Are pending charges already deducted from my account?

Pending charges are technically still in your account, but a legal agreement has been made when you swipe your card, that a given amount is eligible for withdrawal (transfer) from another institution. Your available balance will not contain funds that are being held for a pending charge. 

Will a pending transaction go through if I cancel my card?

Most cards can’t be canceled when they have a hold or pending transaction on them, but even if you are able to cancel a card, you’re still legally responsible for providing the agreed-upon funds to a merchant. 

Bank fees can be levied for overdrafts caused by pending transactions that wind up being unavailable for a number of reasons. If a car rental company finds an issue and faults you for it, for instance, they may be contractually approved to charge your card again and it may not have the available funds at that point. Legal prosecution is also a reality, as this is, indeed, a type of credit card fraud, even if it wasn’t done with your knowledge. 

Pending transactions can reduce fraud 

In conclusion, a pending transaction on your bank statement can be caused by many, many different things, but it ultimately means someone else is authorized to take money from your account within a given amount of time. 

Its primary function is to prevent fraud, but the process of pending transactions also adds a lot of ease to the daily lives of card users. Safer and easier are major goals of financial institutions year after year, and the pending transaction is an extension of those goals.

FAQ

Can I spend money that is pending?

You cannot. It is an authorization between you and a merchant that a certain amount in your account will remain available to only them for a set number of days.

How long does it take for a pending transaction to clear?

Most pending transactions clear in a day or two, but some may take up to a week. At 5 days you may want to contact your bank or the merchant if you don’t know why it would still be pending.

What does it mean when a transaction is pending?

It means that a third party has been approved to access an agreed-upon amount of money from your account within an agreed-upon number of days.  

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