Why you might mysteriously go over your credit card spend limit


It was at a middle-range Toronto hotel. We checked in using my credit card. Up in the room, I decided to log into my credit card account online, which is something I like to do when travelling to make sure nothing untoward is happening.

I found a pending charge of $700 from the hotel, which was a couple times what I expected the final bill to be. The pending charge counted against my credit limit, but it was in the “authorized” section, not the “posted” section where charges become final.

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Not all online credit card sites will show pending charges, as mine does, and even if they do, those pending charges can be easily missed because they are sometimes on a separate screen.

I asked the hotel front desk about the pending $700 charge and was told that it was standard procedure for the hotel chain. They send through a hold for what amounts to a damage deposit. There was a “sorry sir, this should have been pointed out to you.” And it probably was, in the fine print of the check-in agreement that I signed, that nobody reads. The pending charge disappeared a couple of days after we checked out.

This kind of charge is apparently less likely to pop up if you become a regular customer and demonstrate that you’re not the sort to trash the room.

On a holiday, where you might check in at several hotels, those damage deposits can add up, eating into your spending limit. So, it would be worthwhile to find out if the hotels you’re booked at are quietly putting damage deposit holds on your card, and plan accordingly.

A pending charge also mysteriously showed up for a colleague who likes to pay in cash. The hotel insisted on taking credit card information to confirm identity, or so it said. At checkout, he paid in cash. But a pending charge of $400 showed up on his card, three times the cost of the room. There was an explanation about standard procedure and an apology for not making things clear at check-in.

I’ve also seen pending charges when I buy gasoline from a self-service pump. At those pumps, you’re asked to guess how much you need to spend — $10, $25, $50, $100. I usually pick $50 or $100 because I have no idea how much it’ll cost to fill the tank. Even if I only pump $30 of gas, a $100 pending charge will show up if I’ve pushed the $100 button. The pending charge has always disappeared a few days later.

You might also see $1 pending charges if you’ve ordered a subscription to something, such as a streaming music service or regular delivery of shaving supplies or diapers. It’s the merchant’s way of finding out if charges will go through on the credit card that you’ve used, and the charge should disappear.

Here’s how the harrys.com shaving supplies website explains their $1 charges:
“There is a $1 charge on my bank statement — what’s that about?
“Awesome question! Don’t worry, that $1 is merely a holding charge. As soon as your order is shipped out, you will be charged for exactly the total of your order, and that $1 will drop off immediately. It’s just your bank talking to our bank saying ‘Yup, this is a valid account.’ ”

All this charging of stuff to my credit card without my explicit permission is worrying. But the rules allow it and I have to put up with it if I want the convenience of credit-card spending. My main response after discovering this was happening: more frequent checking of my credit card transactions. 

A Visa Canada Q&A explains "authorization hold" policy and its impact on a credit card's spending limit. (Very light grey small type.)

There's also this discussion at creditcards.com Canada.

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