A travel tip for people who expect to put a big hotel or rental car bill on their credit card while travelling this summer: Before departing, make sure your card balance is well below your spending limit.
Hotels typically apply a pending charge on your card when you arrive, as do rental car companies. This pending charge holds space on your card to ensure there will be funds to cover at least some of the eventual charges for your hotel or car. This isn’t a completed, or posted, transaction. It’s just a placeholder that will ultimately vanish from your statement.
Problems can arise when the hotel or rental car company processes your actual bill, which appears in your credit card app or your online account as a posted charge. It’s normal to end up with a posted charge on your card, while the original pending transaction lingers for days before disappearing. Both count against your spending limit, which means you could run out of room on your card at an inconvenient time.
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A reader’s experience highlights this risk. He checked into a hotel while travelling abroad and the hotel put a pending charge on his credit card. Later, he checked out and the hotel charged the actual cost of his stay on the card. The pending charge stayed on the card, leaving him with zero room for additional purchases.
Pending transactions from rental car companies or hotels can stay on your card for up to 30 days, a Visa Canada spokesperson said in an e-mailed reply to questions. Your balance owing on the card is not affected, but the pending transaction amount is deducted from your available funds. “Therefore, if the cardholder is close to their credit limit, a pending charge could use up their remaining credit balance on their card.”
Visa said that pending charges disappear quickest when you pay your final bill with the same card that was used for the pending charge. “When two separate payment methods are used, it can take longer for the pending hold charge to be removed.”
And, plan ahead. Check your credit card app or go online before you leave on your trip to see what your current card balance is and how much room you have until reaching your spending limit. If you’re not sure you’ll have enough spending room on your card after pending and posted hotel and rental car costs, make a payment to lower your balance.
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Rob’s personal finance reading list
Cities with homes under $200,000
Yes, we have some of those. Look to the Atlantic provinces and the Prairies. Now for a list of affordable cities where it’s still realistic to move from renting to owning. And, a Maclean’s article that sums up how housing became so unaffordable in many cities. The headline: The End of Homeownership. Finally, something uplifting. Home affordability improved in May.
Will you spend less in retirement?
A recent study suggests the answer is yes, but not by much at all. The big savings for retirees: You no longer have to put money away for retirement. That’s huge.
Helping your adult kids buy a home
Tips for parents on helping their kids buy a home, including a look at the new First Home Savings Account.
Earn credit card reward points paying your property taxes
While it’s not generally possible to pay a property tax bill on a credit card (and earn lots of reward points), there is a workaround.
Ask Rob
Q: I am receiving my Canadian Armed Forces pension, which has a bridge benefit attached to it. I want to start collecting Canada Pension Plan at 60. If I do start CPP at 60, do I lose the bridge benefit?
A: For help with this question, I consulted Julia Chung, a certified financial planner at Spring Financial Planning. Ms. Chung said government pensions typically pay bridge benefits to age 65. Bridge benefits pay early retirees a specified monthly amount based on their pension contributions and pensionable years inside the plan. The idea is to bridge people until age 65, when CPP and Old Age Security start. In the case of government pensions Ms. Chung has looked into, bridge benefits do not take into account when pensioners start their CPP retirement pension.
“The short story is that taking CPP retirement income at age 60 – or any other age – does not appear to impact the bridge benefit. The bridge benefit will simply end at age 65 no matter what the pensioner does or does not do.”
Do you have a question for me? Send it my way. Sorry I can't answer every one personally. Questions and answers are edited for length and clarity.
Tools, explainers, guides and charts
Need to build – or rebuild – your credit rating? Check out this list of secured credit cards.
The Money-Free Zone
Seventies soul flashback time. The album is Ghetto: Misfortune’s Wealth, by 24 Carat Black. A mix of instrumental tracks and socially biting songs that peaks with the smoking hot Mother’s Day.
From the Twitterverse
I really like this point by the U.S. personal finance guy Ramit Sethi: “Rent is the MAXIMUM you will pay, but a mortgage is the MINIMUM you will pay.”
ICYMI Globe and Mail stories
- Canadian wildfires expected to make home insurance more expensive
- Can a couple with $700,000 in assets collect the Guaranteed Income Supplement?
- Wildfire nearby? It could complicate how much you pay for your new home
More Rob Carrick and money coverage
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Even more coverage from Rob Carrick:
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- ✔️ The housing file: A house isn’t special. Get your head straight about the reality of home ownership • The good, the sad and the unaffordable: Saving for a home down payment in Canada’s big cities • Property taxes are popping in some cities – how worried should you be about other tax hikes? • Our other real-estate problem – people have too much wealth tied up in houses • Borrowers and savers, here’s how to time the eventual rollback of interest rates
- 📈 Investing: Canada's top digital broker is TD Direct Investing, with an assist from the TD Easy Trade app • 2023 Globe and Mail ETF buyer's guide part one: Canadian equity ETFs • For the ultimate in cheap investing, check out the Freedom .08 ETF Portfolio • Yes, there is risk in Canadian bank deposits for the unwary and complacent • CDIC covers bank deposits, but who protects your investments if your broker goes bust? • Answers to your questions about the low-risk ETF paying almost 5% • Happy fifth birthday to one of the all-time best investing products for everyday people • An investing strategy that wins cleanly over the long term by outperforming in bad years like 2022
- 💰 Your money: Mortgage holders, savers and GIC investors, it’s time to change your thinking on interest rates • How much debt is each generation of Canadians carrying, and how do you compare? • For the sake of their financial futures, young people should leave Toronto and Vancouver • This practical new spin on a savings account might just peel you away from your big bank • Rental fraud grows amid rise in fake, falsified tenant applications • Are Canadians worse off financially now than in the 1980s? • From groceries to auto loans, here’s how much more it costs to live right now • When saving for retirement, should you change your asset mix over the course of your career? • Do retirement income needs always rise alongside inflation? Not necessarily • When the bank suggests you lock in your variable rate mortgage, it has an angle
