Why doesn't my online credit card update as fast as my debit?

[sagremus]

Just an annoyance. Recently I used some cash back rewards to pay off a few charges to my credit card. Although my credit card works similar to my debit card, my online banking website will take 3+ days to update my credit card statement, while any changes to my debit card will update automatically.

For example, only minutes after redeeming my cash back rewards by phone, my cash back rewards balance is showing as depleted. However, my credit card balance is still there, and not paid off.

I just feel like this is a way to make me spend more money or loose track of my credit card balance Could there be any other explanation?

[siggy_freud]

Good question, and honestly I don't have a good answer. I'd be curious though if you're still getting charged interest in this interim days between when you make the payment, and when it's reflected. If you are, it could be the banks/cards way of getting a few more days of interest payments from you. I wouldn't put the dirty trick past them.

I remember when some banks (and perhaps some still do) used to arrange debit transactions from largest to smallest when your account was low, so that you'd become overdrawn more quickly, and the subsequent charges would cause more overdraft fees.

For example, your account is at $10.00, and you buy a coffee in the morning, for $2.00, lunch in the afternoon for $5.00, a smoothie after work for $2.00, and then a movie at night for $20.00.

If they charged you as things hit, you'd only get one overdraft fee. But they'd take your days transactions, charge you the movie first, which puts you over, then each subsequent transaction would generate a $20.00 overdraft fee. They'd make $60.00 vs making $20.00.

Your situation with worth a call to see what the delay is about in my opinion.

[sagremus]

I took your advice and called. The service representative just said something about taking 3 days to authorize the transaction. I asked her why for the credit card it took three days but not for the debit card. She said something like "That's the way it's always been."

I asked to speak to a manager or other representative to get my question answered (being a PITA for once). And have been on hold for about 10-15 minutes.

Update: The company then hung up on me. I did some research and found that credit cards(mine is a VISA) must go through VISA first, then is re-routed to the bank that issued it. This process takes several days. I guess this is the answer?

[kork13]

I just feel like this is a way to make me spend more money or loose track of my credit card balance Could there be any other explanation?

Sometimes financial institutions have (and to a limited extent still do) operate in such a way as to trick/trap/cheat consumers. This, however, is not one of those cases. It has to do with the way that banks and businesses move money around.

The reason that checking/debit transactions take effect immediately is because when a business executes a charge to your checking account (via your debit card), the money is transferred immediately from your bank account to the business's bank account. It's instantly out of your account, and in theirs.

Credit card transactions, however, do not instantly send money to the business. When you swipe your card, the business receives an authorization stating that VISA (or whoever) will pay the charge, and carries a guarantee of future payment to the business. There is a processing period involved here (this has to do with inter-bank lending processes), and the business's account is not actually credited with payment until a day or two afterward. Once the business receives the payment, your credit card account is charged, and it posts on the website as an approved charge.

This is actually a BENEFIT for you as the consumer -- because your account is not immediately charged for the transaction amount (as is the case with a debit card), there is an opportunity for both you and your bank to identify and stop payment on fraudulent charges.

This next bit depends on the bank... But some banks' websites will show you pending authorizations that are currently active on your card. This way you can instantly see the authorizations that have been placed against your account, and you know that the charges will clear and post within 2-3 days. So depending on how your bank's website is set up, you CAN see your transactions instantly.

ETA:

Update: The company then hung up on me. I did some research and found that credit cards(mine is a VISA) must go through VISA first, then is re-routed to the bank that issued it. This process takes several days. I guess this is the answer?

Exactly.

[kork13]

I'd be curious though if you're still getting charged interest in this interim days between when you make the payment, and when it's reflected. If you are, it could be the banks/cards way of getting a few more days of interest payments from you. I wouldn't put the dirty trick past them.

I believe credit cards cannot charge interest on authorized amounts -- pretty sure they only charge interest once the charge clears and posts to your account. (Possibly mistaken, but a call to customer service would clarify this easily)

I remember when some banks (and perhaps some still do) used to arrange debit transactions from largest to smallest when your account was low, so that you'd become overdrawn more quickly, and the subsequent charges would cause more overdraft fees.

You're very correct, this used to happen frequently. However, this practice was made illegal as a part of the consumer protections bill (I believe they called it the "CARD Act") that was passed by Congress back in 2009 (-ish). Occasionally the Congress actually does do something right, and that consumer protections act is definitely one of them. Getting that bill passed must have maxed out their quota for good ideas......