If you've been reviewing your credit card statements online, you might have noticed a random $1 charge — often noted as "pending" — among your list of purchases.
Some fraudsters might do a trial run on victims' credit cards, charging $1 to see whether anyone notices before they run up larger charges. But oftentimes, a $1 charge is legit — at least temporarily.
Where do those $1 charges come from?
If you look at your list of pending purchases, you’ll probably discover that a random $1 charge bumps right up against a charge from a gas station, hotel or rental car company. That's because the $1 charge is actually a temporary preauthorization from your credit card company, basically giving the merchant the green light to charge your card for the full amount when your final purchase is made. By preauthorizing your card $1, the card company doesn't have to place a larger hold against your account.
The $1 charge disappears when the final amount you’ve spent at a hotel or gas station is no longer pending. The preauthorization is lifted, and the $1 charge doesn’t show up on your final statement.
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Why do I only see it with certain purchases?
Some kinds of merchants require preauthorization, while others don't. Certain merchants — like pay-at-the-pump gas stations, hotels and rent-a-car companies — don’t yet know the final cost of your purchase when they accept your card.
For instance, when you initially swipe your card at a gas pump, the station doesn't know how much it'll take to actually fill your tank. That's why the merchant preauthorizes your card; that way, they'll be pretty sure that you won’t charge more than your credit limit will allow.
When should I worry about a $1 charge?
The $1 that’s charged to your card when you rent a car or stay at a hotel should automatically drop off of your account when your final purchase shows up on your statement. In fact, once the final charge is no longer pending, you shouldn’t see the $1 pending charge anymore. in these cases, there's no need to take action or try to cancel the pending charge.
But if you notice that the $1 doesn’t automatically disappear, or you see $1 charges showing up on your final credit card statement, it’s time to get in touch with your bank and find out what's going on. It may be a sign that someone is "testing" your account to see if they can use it for fraud. They hit your account for $1, and if you don't catch it and it goes through, they take it as a green light to make larger charges.
The takeaway: Those funny little $1 charges that keep popping up on your credit card account are usually nothing to worry about, and they should disappear before you’re required to make a payment. Just be sure not to ignore any unauthorized $1 costs that stick around. Those could indicate a problem.
» MORE: How to prevent credit card fraud
