As a way to protect against everything from drive-offs at gas stations to hotel rooms from being damaged, some businesses have policies in place that may be harmful to their customers’ finances – putting an electronic hold charge on people’s credit and debit cards.
“In 2007 when gas prices hit an all-time high, holds were put in place by companies to protect themselves because people were driving off,” said Tim Alford, branch manager of Aberdeen’s Cadence Bank. “It’s not a bank issue. It’s done by the vendor.”
One Amory gas station owner, who wished to remain anonymous, said the practice is called a holding security deposit.
“I get a complaint about it every two or three days,” he said. “The duration of the hold is typically two to three days, especially if payment is made near the end of a billing cycle or around a long weekend. The charge is easy to identify because it’s always a round figure.”
With a credit card, customers’ credit lines are temporarily reduced by the hold amount. With a debit card, the available balance is reduced. When the purchase is totaled, the difference between the hold and the purchase is credited back to the consumer.
It’s easy for an account to be depleted or even go through an overdraft because of holds placed on debit cards.
According to a Capital One customer service representative, holds on credit and debit cards are common practice at some hotels, car rental services and retailers. Alford added some retailers have similar policies.
“Once the products are sent out, the holds are released,” Alford said.
In the case of gas stations, some locations may place a hold between $1 and $100 on credit and debit card accounts to confirm validity and that the funds to cover purchases are available.
“You may spend $10, but the hold is for $75. It’s all an electronic process, and there’s nothing a bank can do. It’s on hold,” Alford said.
Car rental services may have holds of as much as $200 that roll off after the car is returned. Holds at hotels could be as much as $250 after a reservation is made.
Alford said banks don’t determine how long a hold is; the card processors do.
In the hypothetical instance a hold carries over to a bill through a change in a billing cycle, customers are recommended to call their credit card companies immediately so the company can dispute the transaction and adjust the charge.
As a security measure for consumers, Alford recommends for people to use debit cards inside at gas stations, rather than when paying at the pump. He also recommends for people to use PayPal accounts for online purchases enabling people to pay either by credit or debit cards through one secure location. Another tip is for people to have a usage alert on their debit cards.