Debit card "holds"

[markusk]

The other day I was shocked to hear about some practices by retailers placing a "hold" on the account after debit transactions, for almost double the transaction amount, for 10 days. The transaction clears in one day, but the hold lasts 10 days. If you have several of these transactions consecutively, with each retailer placing "holds," you can technically over withdrawal and be charged over drift or insufficient funds fees -- even with a balance on the account.

I don't use debit cards so I never knew about this. How pervasive is this practice? This just goes to show you how banks are "innovating" more ways to make money.

[disneysteve]

This has been going on for ages. I think there is a certain amount of justification for it but it definitely gets abused. For example, at a restaurant when they run your debit card to pay the tab, they put a hold on for a larger amount to account for the tip you might leave. Fine. But after the customer leaves, the hold should be released. Same at a gas station when you swipe to pump gas. They don't know how much gas you will buy until you are done. Once the transaction is complete and you drive away, the hold should be gone.

A problem area is with something like a rental car. If you rent a car for a week, they put a large hold on your account in case you come back late, damage the vehicle, etc. The result is that you spend your vacation with a big hold on your account.

Just one of many reasons why it is better all around to use a credit card. I've never used a debit card in my life and never intend to.

[LuxLiving]

I'd ask my banker about this, but I'm afraid to give him any ideas! Although, I'm sure he's aware of industry innovations, I just don't want to wake a sleeping dog.

[Joan.of.the.Arch]

I don't understand how that can make you technically overdraw. ??? Do you mean it may cause you to keep using the debit card because you don't see your account balance going down? You just forget that you made those debit transactions which are on hold?

[disneysteve]

I don't understand how that can make you technically overdraw. ??? Do you mean it may cause you to keep using the debit card because you don't see your account balance going down? You just forget that you made those debit transactions which are on hold?

You don't know about the hold or the amount of the hold. It isn't on the receipt you get. That makes it very easy to overdraw the account, especially if you are traveling and not able to check your account balance online. If you check into a hotel and they put a hold on the account after the rental car company has put a hold on the account and then you dine out every day and each restaurant puts a hold on the account, along with gas stations putting holds, you can very easily get into trouble. You may know that you only spent $500 but the holds could be 2 or 3 times that much or even more.

[Like2Plan]

I don't understand how that can make you technically overdraw. ??? Do you mean it may cause you to keep using the debit card because you don't see your account balance going down? You just forget that you made those debit transactions which are on hold?

When they put a hold on your account, those funds are frozen and can't be used for other purchases. I often see a placard at hotel chains asking folks not to use their debit card on check in because they routinely put a hold of $1500.00 (or more) on your card.
They do something similar on your CC . I have found it takes a long time for that to clear out on the CC, too. I find it irritating on the CC because on my card it just shows up as a large pending amount--so I don't know if it is just the hold from a recent trip or if there are fradulent charges on the account which just haven't posted.

[disneysteve]

They do something similar on your CC .

I've never noticed it on my CC statements, though I don't check the account online daily. I just review the bill when it comes so I guess it isn't listed on there.

Plus, it wouldn't pose a problem on a CC since the available credit line is 10 times the amount that I typically charge in a month. My checking account balance, though, is not 10 times what I spend in a month.

[Like2Plan]

I've never noticed it on my CC statements, though I don't check the account online daily. I just review the bill when it comes so I guess it isn't listed on there.

Plus, it wouldn't pose a problem on a CC since the available credit line is 10 times the amount that I typically charge in a month. My checking account balance, though, is not 10 times what I spend in a month.

If you have the Chase Marriott CC, it will show up on the account details--under account info:
Outstanding Balance $XXXXX
Pending Charges $XXXXX
Total Credit Limit $XXXX
Available Credit $XXXX


If you add the outstanding balance + pending charges + available credit it will equal total credit limit.

As you say, it is not a big deal with a large credit line and you PIF each month. But, if you monitor your card on a daily basis to keep an eye out for fradulent charges, it makes it difficult to tell if it is an unauthorized charge or just a hold from the hotel.

[disneysteve]

Interesting. I never realized that. I guess I've always assumed that pending charges were things that happened after the statement closing date.

[Joan.of.the.Arch]

Once again this forum's info coincides with what I'm encountering in real life. I have an account used for savings, but to get the really good rate on it, I must use a linked debit card one dozen times per month. Because I want that account balance as high as possible, I use my debit card only on very small purchases, usually under $3. I check on the account everyday. Sometimes, purchases get listed as pending, but only for about three days.

But today my "account balance available" is exactly $3 less than "account balance". Hmmm....

[snafu]

This 'hold' on CC can be problematic if it takes you over your credit limit. Imagine the airline, airport fees, ground transportation, hotel, meals, tour bus, exchange rates/fees, incidental purchases as you and family do Asian Tiger 6 countries, 13 cities.

When they triple the hotel cost 'hold' and get confused about exchange rates your CC can go over-limit. To top it off, they keep all this double/triple hold a BIG secret. Have you ever seen them outline these facts on the pretty brochures that accompany the statement?

[markusk]

So "holds" on Debits cards are not new. Did not know that. I also never knew that CC's place "holds."

I guess I have been fortunate in avoiding the holds because I've made a habit of using two different CC's when vacationing (inadvertently). I use my CitiCard to book hotel rooms and to buy the plane tickets in advance. I then use my ChaseCard during the actually vacation for meals, show tickets, etc.

I download my CC transactions about every other day via Quicken so I am aware which transactions cleared but I never log on to the CC websites to view the actual "total available credit limit."

Thanks for the heads up.