What is the $1.00 charge on my credit card?

That Mysterious $1.00 Charge on Your Credit Card: Don’t Panic!

Have you ever glanced at your credit card statement and noticed a small, often $1.00, charge you don’t recognize? Before you start frantically searching your memory for a forgotten purchase, take a breath. This phantom charge is likely an authorization hold, a common security measure used by businesses to verify your card’s validity and available funds.

Think of it as a quick handshake between your card and the merchant’s payment system. When you add a new card to an online account, subscribe to a service, or even reserve a hotel room or rental car, the merchant may place a temporary hold for a small amount, typically $1.00. This isn’t a real charge; it’s a test. The merchant is essentially asking your card issuer, “Is this card legitimate? Does it have enough funds to cover future transactions?”

Your bank responds with a yes or no, confirming the card’s active status and available credit. Once the card is verified, the hold is automatically removed. This typically happens within a few business days, although it can sometimes take a bit longer depending on your bank’s processing times.

While the amount is usually $1.00, it can occasionally be a different small amount. The key is that it’s temporary and doesn’t actually deduct money from your account. You won’t see it on your final statement as a charge.

Why is this necessary?

This practice helps protect both you and the merchant from fraudulent activity. It prevents unauthorized use of stolen or inactive cards, and assures the merchant that the card presented can indeed cover the cost of future purchases or services.

What if the charge doesn’t disappear?

In the rare instance that the $1.00 authorization hold remains on your statement after a reasonable timeframe (generally a week), it’s a good idea to contact your bank or credit card company. They can quickly investigate and remove the hold if it’s lingering in error.

In short: A $1.00 charge on your credit card is almost always a temporary authorization hold, a standard security check, and nothing to worry about. It’s a sign that your card is working and protected. So, next time you see that small, mysterious charge, remember it’s likely just your card saying “hello” to the merchant.