If you’re asking “What is a provisional credit from a bank?” there’s a good chance that you’ve recently had a disputed transaction or a transaction that was flagged as fraudulent on your payment card.
In most cases, this requires you to submit a “disputed charge claim” to the card issuer. That said, even if you know why a provisional credit has been applied to your account, you may still be wondering how it can be used.
In this article, we’ll answer the most common questions about provisional credit that you might have and other insights on personal banking in the USA.
On the other hand, if you’re looking for US business banking insights, you might want to review our latest article on tax obligations and LLC taxes for non-residents.
Feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
- Provisional Credit 101
- How Long Do Banks Extend Provisional Credit?
- How to Qualify for Provisional Credit
- Frequently Asked Questions
- Ready to Open Accounts With Banks in the USA?
Provisional Credit 101
Provisional credit from a bank typically gets added to your credit card account when there has been a disputed or fraudulent transaction. This provisional credit is added during the period when the bank is attempting to verify whether or not the transaction is in fact disputed or fraudulent.
In other words, the bank offers you this credit temporarily until they can make a final determination on the charge.
If the charge comes back in your favor (meaning it was in fact fraudulent or disputed in your favor), then the provisional credit becomes permanent.
On the other hand, if the charge does not come back in your favor (meaning it was not fraudulent or your dispute failed), then the provisional credit will be reversed.
With this in mind, it’s usually best not to spend any provisional credit until the claim has been resolved by the bank. Otherwise, you could find that you owe the bank for any amount of money that you have spent from the provisional credit (more on this below).
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How Long Do Banks Extend Provisional Credit?
Provisional credit is provided to the cardholder throughout the transaction investigation. As a result, the exact time will vary depending on the time it takes to resolve the claim.
For example, in certain instances, a dispute may be resolved in a matter of days while in other cases it could take months for a bank to complete its investigation and resolve the dispute.
When Will a Bank Not Issue Provisional Credit?
Banks may refuse to issue provisional credit if you have had an unusual number of disputed charges or fraudulent charges. In other words, they may feel that your account is engaged in suspicious activity and the charges that you are disputing are not genuine.
How to Qualify for a Provisional Credit
In order to qualify for provisional credit from a bank, the cardholder must file a disputed fraud complaint. This is usually a very straightforward process that can be completed through the bank’s online banking platform.
That said, a provisional credit is temporary and if you dispute a charge the bank will then carry out an investigation into your claim. With this in mind, you should only dispute claims when you are certain that they have not been authorized.
Frequently Asked Questions
Below are two of the most common questions that we receive from people researching provisional credit. If you have further questions you would like answered, don’t hesitate to get in touch with us directly.
Can I Spend My Provisional Credit?
Yes, you can spend your provisional credit from a bank. However, depending on the outcome of your dispute, provisional credit may be temporary. In other words, if the transaction dispute does not end in your favor, you will need to pay the bank back for any of the provisional credit that has been used.
What Transactions are Eligible for Provisional Credit?
The transactions that are eligible for provisional credit include charges made to your credit card that are unauthorized. This may include transactions that you do not recognize or are unable to verify such as fraudulent charges.
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