Be careful when using your debit card at the pump.

[OhioBlue]

I didn't realize this, but gas stations can put an "authorization hold" on your debit card for an amount separate from your actual charges.

The wikipedia entry http://en.wikipedia.org/wiki/Authorization_hold lists gas stations, restaurants, motels and rental car companies as the most frequent users of this practice.

Anyway - I wanted to share my experience this week, to give you all a heads up on this practice.

I went to the gas station on Monday. The charges were $28.14. I went inside to pay with my debit card. It was a new clerk who was having trouble with the credit card machine. She asked for my card twice and had to call the manager out to finally get the transaction to go through. Today, I look at my account online, thinking I have about $300 as a balance, it was $50. There was a $250 pending transaction from the same gas station and a pending transaction for the $28.14 actual charge. I went to the gas station, they checked their end of the day print out from Monday and only showed the $28.14 as being submitted for payment. They did say that the $250 charge has happened before and that it should be credited back within 72 hours.

I called the bank. They said it is called an authorization hold, and if I had other transactions that go above the current $50 balance, I will incur overdraft charges. Luckily, I don't have any outstanding checks, but, I also couldn't get groceries today after work.

I was not warned that there would be a $250 hold on my account and I didn't authorize it. The entire thing is a small inconvenience, but in another situation it could have cost me over draft charges, or at the wrong time kept me from having needed cash that is in my bank account, but put on hold by the gas station.

The bank said that they have seen this before, but usually it is only for $1. The wikipedia entry also mentions it is a common practice at $1 for gas stations to do this when you pay at the pump. The bank said that the $250 hold was legal and the practice has been used for years.

So, after looking into it a little bit, my advice is: Don't use your debit card for hotel/motel rooms or rental cars (unless you are very comfortable and carry a large balance) and also beware that restaurants can put an additional hold amount on your card and I would pay inside at the gas station. (Even tho I paid inside, I think the teller may have screwed something up as the info I read and from the bank indicates that this practice is almost exclusively used at the pump when you swipe your card before pumping the gas - not at the counter when the teller has the correct amount)

[Deja Q]

1. Hmmm, they give the option to use the card as 'debit' or 'credit'...

I always click "credit", oopsie-daisy... I've never seen this charge, but I'll use my regular credit card next time and pay it off straight away if that's what banks want...

This temporary fee they put in seems stupid anyway...

[Phx_Dem]

2. Interesting

Thanks for posting. You can get the "hold" released sooner if you contact the CC processing center for the company that has the hold.

[OhioBlue]

6. thanks for that info

If it isn't released tomorrow, I might see if I can get the number for the processing center.

The bank nor the gas station mentioned that option to me. To be fair to the local personal banker, and the local clerk at the gas station, they were both working their way through the "hold" themselves.

[TommyO]

3. Some of my local stations have the policy right on the pump

They'll put a $50 hold with a $50 max purchase for a debit card, and a $50 hold with a max $75 purchase for a credit card if you do it at the pump. I've never had a problem with the hold being released almost immediately.

[Left Is Write]

4. I never run my checking card as a debit. I always run it as a credit card.

I do this for a number of reasons, one of which is the hold you mentioned; the primary reason, however, is that I get cash back on all non-pin transactions.

[Phx_Dem]

10. That's what I do also

It's also a good way to get around debit fees at the point of purchase. The great thing is that the transaction is still run as a debit. Some small retailers actually prefer credit transactions because they can be paying very high commissions on debit transactions, higher than the % fee they pay visa, mc etc. for credit transactions.

[trof]

5. I don't understand the attraction/advantage of debit cards.

I use a credit card and my money stays in the bank until I pay the credit card bill. I get a small interest rate on my checking account (credit union) so I get the 'float'.

I use Discover for EVERYTHING. I can even pay some of my monthly bills (utilities, cellphone, etc.) with it.

I get 1% cash back, 5% on the first $1200 in gasoline purchases.
It comes to a tidy sum each year.
Christmas shopping money.

Why use a card that immediately takes the money from your account?
I don't see the advantage.

[Maine-ah]

7. most businesses do

it (for me) is called a pre-authorization, and it sucks.

[Mrs.Matcom]

8. Never, ever use your debit card at a car rental agency.

I run the fraud department at a bank, and see double charges or even triple charges coming through on debit cards from car rental agencies. People will often use their debit card as a way to "hold" a car, but will pay cash when they turn in the car. Retailers have to get an approval code on the charge, and they will do the approval for every day you have the car. All of a sudden the charges will go through and there goes your money. The Banks are not responsible for paying you back this money, because you gave the rental agency your card and authorized the 'hold'. It is up to the consumer to deal with the rental agency to get their money back...and that is not easy. I only use my card at local grocery stores or stores that I go to frequently. And never at a gas station. :hi:

[grace0418]

9. I stopped using my debit card and this was one reason. I just use my credit

card and pay it off every month. I get airline miles for it, so why not? Now I only use my debit card to get cash. It makes it a lot easier to keep track of my bank account too. Now there's just one payment to my credit card company instead of a million little debit transactions.

[BluePatriot]

11. yikes, $250???

the most I have heard of is $50, maybe $75. Thanks for the heads up.