Am I Responsible for Pending Charges if I Cancel a Credit Card?

When you pay for an item or service with a credit card, it seems instantaneous. You walk away with your purchase and the merchant gets paid. The actual process is a little slower, with many credit card companies issuing a temporary authorization on your account. If the charge ends up going through, you're responsible for paying it, whether you cancel your card or not.

TL;DR (Too Long; Didn't Read)

You will be held responsible for any pending charges that go through, even if you cancel the credit card.

Understanding a Pending Charge

When a merchant swipes your credit card or you use your card to buy something online, the card company authorizes the transaction, usually for the amount of your purchase. In some cases, the authorized amount is less than your purchase, such as when you pay for a restaurant meal with your card and then add a tip to the charged amount. In other cases, it can be more. For example, if you pay for gas or a hotel with your card, the company might charge you more than you end up paying, since it can't accurately guess the final charge during the authorization process. When the charge does post to your account, it is for the actual amount of your purchase.

Paying Off the Balance

As long as the pending charges end up posting to your account, you are responsible for paying them, even if you've since canceled the credit card. If you have a card that has charges pending, wait until those charges have posted before closing the card, so that you know how much you owe.

You might want to wait to cancel your card until after you've paid your balance in full. While you can cancel a card that has a balance on it, doing so won't close the account. The account stays open until you pay off the balance, and it sometimes incurs additional fees or a higher interest rate. Read your credit card's terms and conditions carefully before canceling a card that's carrying a balance. Remember, too, that canceling the card doesn't release you from your obligation to pay any debt you've accrued. To avoid a black mark on your credit report, continue to pay down the debt on the card until it's paid off.

Canceling the Card

Contact your credit card company's customer service department and tell them that you want to cancel the card. The company might let you do it online, but in many cases, you'll have to call. Send a follow-up letter a few days later to confirm your request to cancel the card in writing. In your letter or while on the phone, request that the company send you notification in writing when they close the account. Check your credit report about 60 days after you contact the company to see if the card shows as canceled or closed. If it's not, call the credit card company again and verify that the account was truly closed and ask when they plan to report that information.

Preauthorized Charges

If a company, such as your cell phone provider or insurance company, regularly charges your credit card, you'll need to provide a new card number before you cancel. The credit card company has to continue to accept preauthorized payments, even after you've canceled the card, according to the U.S. Office of the Comptroller of the Currency. The payment arrangement creates a contract between you and the merchant. Because the credit card company isn't party to the agreement, it can't legally change or cancel it. That means you can still be on the hook for payments, even when the account closes, unless you notify the credit card company in writing that you've ended the agreement.

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