What Is Provisional Credit?
4 Min Read | Published: April 16, 2024
This article contains general information and is not intended to provide information that is specific to American Express products and services. Similar products and services offered by different companies will have different features and you should always read about product details before acquiring any financial product.
A provisional credit is a temporary credit applied to your account while a dispute is investigated. Its permanence depends on the outcome of the investigation.
At-A-Glance
- A provisional credit is a credit applied to your account while a transaction is being disputed or verified by a bank.
- The provisional credit will typically be in the amount of the charge that is being investigated.
- The provisional credit may be made permanent, or it may be temporary and end up being reversed later on.
Fortunately, banks and credit card companies offer provisions that help to protect cardholders from unauthorized or fraudulent activity. That’s where provisional credit comes in. While deciding whether to reimburse you for disputed transactions, your bank or credit card issuer may apply a provisional credit to your account as a placeholder for the actual funds. Below, we’ll dive deeper into how a provisional credit works and how it may affect you.
How Does Provisional Credit Work?
Put simply, a provisional credit is a credit issued by a bank or credit card issuer to an account holder while they investigate disputed charges, including potentially fraudulent or unauthorized charges. It may occur in situations where you notice unauthorized activity or billing errors and bring them to the bank or credit card issuer’s attention, or in some cases, it may be initiated by the bank itself.1
The provisional credit may be temporary and end up being reversed, or it could become permanent, depending on the results of the investigation.
The provisional credit will typically be in the amount of the charge that is being investigated. It’s designed to help provide relief for the cardholder who would otherwise have to cover the expense themselves.
It’s important to note that the bank or credit card issuer may withdraw its money at any time. If you’re not careful, this could result in an overdraft so it’s a good idea to leave enough available credit available, just in case, so you don’t end up in overdraft or exceed your credit card limit.2
What Can Trigger a Provisional Credit?
There are a number of instances that may trigger a provisional credit, including:3
- Suspected fraud: If there is a sign of a fraudulent charge, a provisional credit might be applied. Fraud may occur when someone takes your credit card or obtains your card details, and makes a purchase without your permission.
- Charge error: A charge error refers to a charge that was a mistake. A few examples of charge errors that may warrant a provisional credit include subscriptions you canceled, double charges, or charges you never made.
- Verifying charges: Sometimes, your charges may need to be verified. This can be because they’re large or questionable for any reason. A provisional credit may occur while the credit card company is verifying one of your transactions.
Keep in mind that provisional charges are not always applied immediately. Also, each bank and credit card issuer has their own policy, so it’s a good idea to reach out to yours for more information on how they handle provisional charges.
Frequently Asked Questions
If the bank or credit card issuer determines a disputed charge was, in fact, legitimate, it may reverse a provisional credit. On the other hand, if there is evidence of a fraudulent or incorrect charge, the provisional credit can become permanent.
The bank or credit card issuer will reverse a provisional credit if the dispute is deemed inaccurate or illegitimate. There is nothing you must do except keep an eye on your account to see what happens. You can always reach out to your bank with any questions or concerns about a reversal.
The Takeaway
A provisional credit is a credit applied to your account by your bank or credit card issuer. It may occur while they are investigating a potentially fraudulent or unauthorized charge.
1 “What Is a Chargeback? Definition, How to Dispute, and Example,” Investopedia
2 “What Is Provisional Credit and How Does It Work?,” SuperMoney
3 “What Is Provisional Credit? Advantages and Disadvantages,” PaymentCloud
Anna Baluch is a personal finance writer from Cleveland, OH. She enjoys helping people from all walks of life make smart financial decisions. Her work can be seen on Credit Karma, Forbes, LendingTree, Insurify, and many other publications. Connect with Anna on LinkedIn.
All Credit Intel content is written by freelance authors and commissioned and paid for by American Express.
Related Articles
How to Report Credit Card Fraud
Learn how to report credit card fraud and protect your finances. Here are some things to consider when reporting credit card fraud to take action against unauthorized transactions.
What Is Identity Theft Monitoring?
Identity theft monitoring services can alert you to suspicious activity that might otherwise go undetected. These solutions can help you take action to prevent identity theft.
What Is Credit Monitoring?
Learn about how credit monitoring services work, the types of protection you can get from them, and whether they’re effective.
The material made available for you on this website, Credit Intel, is for informational purposes only and intended for U.S. residents and is not intended to provide legal, tax or financial advice. If you have questions, please consult your own professional legal, tax and financial advisors.
Shop All American Express Credit Cards
