What Does Posting Date and Transaction Date Mean?

What Does Posting Date and Transaction Date Mean? - Credit Card in the Terminal
Bill Cascade   NEW 02/09/2019 00:00:00 Guides

Some people are unclear about the differences between posting date and transaction date. Both may initially seem insignificant. Yet, such differences can make a wealth of difference to our financial activity.

Here we define each term, offering examples. Thus, making you aware of the implications posting date and transaction date have on your finances.

Explaining the Term Transaction Date in More Detail

Transaction date refers to the actual date in which trade has taken place. The trade itself can include a wide range of financial instruments.

The transaction date is vital because it’s representational of the time. Thus, this time states when ownership has officially transferred.

Where You’ll See the Term Transaction Date Used

You’re most likely to come across the term transaction date daily, yet without noticing it!

Firstly, you’ll see transaction date references with regards to many banking transactions. These will all include transaction date, and include:

  • Withdrawal from or deposit to a personal bank account by use of an ATM
  • Using a debit card to make a payment
  • Making an in-person transaction at a physical bank branch
  • Withdrawing funds as per a paper check
  • A sale recorded on a credit card
  • A POS recording – that is a point of sale
  • Depositing money between online accounts
  • Withdrawing money between online accounts
  • Transferring funds between online accounts

    You’ll also find transaction date references relating to investing. These include:
  • Buying shares of a security
  • Buy-to-open
  • Buy-to-close
  • Receiving dividend payments of cash
  • Reinvesting the distribution of cash dividend payments
  • Depositing a return in the capital in distribution from the cash received
  • Depositing a capital gain from cash received 
  • Depositing interest income from a debt instrument
  • Depositing interest income from preferred shares
  • Moving shares between accounts
  • Gifting stocks
  • Selling of shares
  • Selling-to-close
  • Recording stock splits

Essential Points to Note About Transaction Dates

Posting and Transaction Date - Transaction date - Notes

Something worth noting is how transaction dates get dealt with when banking. These differ slightly to that of trades. 

So, when a transaction appears in a bank account, the date here is also referred to as the transaction date. But, this does not necessarily mean it’s the same date the bank clears the transaction. Neither does it have to equal the same date of any deposits or withdrawals from the account.

The Difference Between a Transaction Date and a Settlement Date

There’s often a little confusion surrounding transaction date and settlement date. This is merely about the clearing process. A clearing process starts when a transaction’s committed. It then runs through to what’s considered the settlement date.

But a transaction date doesn’t have to be the same as the settlement date. Settlement dates can happen several days after the initial transaction has taken place.

The seller will receive their pay upon settlement. This is when all details about the transactions are finalized. This is the point at which the buyer is sure and has taken delivery of what they were initially promised.

When it comes to transaction and settlement dates, differences are evident in trades. 

This can be seen in regular way transactions. These settle after the trade date on the second business day. This is commonly referred to in the trading world as T+2. Examples that use this process include corporate bonds and stocks.

Some transactions also settle using the process of T+1. Those who settle this way include U.S. government securities. 

Then, there are transactions that can be specified with a desire for settling on the same day as trading. These are more commonly known as cash trades. 

Explaining the Term Posting Date in More Detail

Following the transaction date, posting date can also be the same as the transaction date, as well.

Posting date refers to the three significant numbers of date, month, and year. This is about when a card issuer posts a transaction, adding it to a cardholder’s account balance. 

Where You’ll See the Term Posting Date Used

The term posting date is a common financial and accounting concept. But, it’s not something regular customers will come across too often.

It is, in fact, more to do with the activity of processing transactions. This means by way of electronic payments. 

Post date can be affected by various elements. This is regularly seen when communication for such transactions relies on many entities. 

Banks have systems in place to help account holders with their account during this time. Thus, they can help a customer manage their balance during what’s referred to as a floating period. This is the period between the occurrence of a transaction and when it’s posted – or settled as such. 

Once transactions are authorized, funds are placed on hold by the account’s issuing bank.

Whether a credit card or debit card was used to make the transaction, this will be dealt with accordingly.

Posting and Transaction Date - Posting date usage - Credit and debit cards

For credit card transactions:

The available credit balance is reduced by the purchase amount.

For debit card transactions:

A reduction is noted in the account holder’s available funds. 

For both credit and debit card accounts:

Such transactions are typically noted by the account holder as pending transactions. Thus, issuing banks usually use the post date for the final date recorded. This is when it comes to the account holder’s monthly statement.

Where Post Date’s Considered Most Important 

To gain a clearer idea of the importance of post date, credit cards can help us better understand. This is because the interest charged on credit card statements is affected by the post date.

It’s vital for cardholders to watch their account’s credit limit an keep an eye for any charges not yet posted. This is because should they edge toward the limit, and charges are also incurred, they will incur fees. They could even have their future transactions declined in the meantime.

An early posting date means funds paid off sooner. This then means less interested charged on those outstanding balances. A payment post date before the monthly due date for a credit card prevents late fees applied.

So, the post date is important here when it comes to considering whether payments made to the card is on time.

Commonly, credit card issuers inform customers of payment posting dates on their accounts. But there are different rules for each issuer. This is especially so about posting based upon receipt of payment. 

An excellent example of this is a financial service company accepting online payments. Let’s say that their ruling is payments need to be made before 5.00pm Eastern Standard Time. This means should a payment be made after this time; they won’t be posted until the company’s next business day.

Essential Points to Note About Posting Dates

A vital point about posting dates are their close relations to transaction dates. Thus, it’s important not to become confused by the two.

Thus, a post date’s considered the final date that funds are either taken or added to an account. You may often hear this referred to as the settlement date as well.

But, the post date can in some cases be the same as that of the transaction date. Yet the difference here is that of a period between both transaction date and post date. This is called the Float. Thus, there’s likely to be around one to three days from the transaction date to the post date occurring.

Final Thoughts on Posting Dates and Transaction Date Meanings

Understanding the most basic concepts and simple terms help immensely. This assures we can keep up with our accounts and finances. 

In concluding, the terms posting date and transaction date may sound simple. But, to ensure the best financial outcome, their differences need observing and acknowledging.

Whether it’s in business, trading or merely as a customer using a credit card to buy a coffee, being knowledgeable when it comes to your finances ensures the best results, always. 

So, the next time you make or receive a payment, pay a little more attention to both of these terms. This will ensure you’re making your money work for you, rather than against you!

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