A provisional credit refers to a temporary credit granted by a bank to an account holder, which can be subject to reversal or made permanent based on the reason behind its issuance.
Banks have the discretion to provide a credit to account holders, which will then be displayed as a separate entry on the cardholder’s statement. Although the statement will indicate that it is a credit, it may not always provide a detailed explanation of the specific reason.
If cardholders find themselves unsure about the origin of a provisional credit, they can typically reach out to their bank for additional information. The issuing bank can disclose the specifics of the credit, including its source, the reason for issuance, and the timeframe until the provisional credit is finalized.
A provisional credit serves as a temporary credit that matches the disputed transaction’s amount and is applied to your account while your bank or credit card company concluded their investigation. Financial institutions provide these credits to ensure that their customers maintain access to funds, even during a fraud investigation.
If the investigation determines that the alleged error was indeed incorrect, the provisional credit becomes permanent since you are no longer held responsible for the disputed transaction. However, if the investigation finds you liable for the charges, the provisional credit will be reversed.
Written by Andrii Vovk