Debit Card Holds – Can You Avoid Them?

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Notice a strange pending transaction on your debit card statement and wondering if you’re the victim of fraud? Your account has probably been subject to a debit card hold by a gas station, hotel or rental car company. It’s a legitimate transaction that’s only temporary – but it could still cost you significant overdraft fees.

What is a debit card hold?

When you use your debit card to pay for things like gasoline, a hotel stay, a restaurant meal, or a rental car, the merchant doesn’t know how much it will need to charge your card. Will you put $10 of gas into your car or $100? Will you rack up additional charges by raiding the minibar at the hotel?

To make sure there is enough money in your bank account to cover the final amount, some merchants place a debit card hold on your debit card to temporarily freeze some of your funds until the transaction is completed and the merchant has been paid. While this amount is on hold, it is unavailable for you to spend on other things. If you make additional purchases or withdrawals, a hold could cause you to overdraft your debit card, resulting in costly overdraft fees – even though you believe you have sufficient funds available to cover all of your transactions.

Debit card holds are temporary transactions, that are usually recorded as pending on your bank statement. They are not fraudulent and often go away within a few hours, though can stay in place for several days depending upon the transaction type, the merchant and your bank. You’ll rarely see them on your monthly bank statement, so unless you happen to check out your account online, you may not even realize that you’ve been subject to a hold. (Banks could of course make this clearer to customers instead of using gobbledegook like tot odp cr swp on their statements!)

In some cases, a debit card hold will be a separate transaction, which may be labeled as a preauthorization hold. Other times, the transaction amount will be for the amount of the hold, which can be much larger than what you actually spent and look like fraud. However, once the hold is removed, the transaction amount is adjusted to the amount of your purchase.

If you pay with a credit card, you may also be subject to a temporary hold, which will reduce your available credit until it is released by the merchant.

Why did a gas station put a hold on my debit card?

debit card holds can now reach $175 at gas stations
Soaring gas prices have led to debit card holds as high as $175.
Gas price” by basykes is licensed under CC BY 2.0.

When you use your debit card to pay at the pump, the gas station doesn’t know how much you’re going to spend. To ensure that there are sufficient funds in your bank account to cover your fill-up, the gas station places a temporary debit card hold on your account.

Many stations used to just hold $1, so that they could establish that you had a positive balance in your bank account. However, with the price of gas soaring to record highs and $100+ tanks of gas sadly becoming commonplace, most gas stations have significantly increased the amount that they put on hold. Visa and Mastercard recently increased the amount that gas stations can put on hold to $175, so even if you only bought a few gallons of gas you may have $175 of your funds unavailable to you until the hold is released.

How long do debit card holds last?

Some debit card holds last just a few minutes, while others can stick around for several days. Bank policies around preauthorization holds vary widely and fortunately not many banks publish clear debit card hold policies.

When a merchant posts a final transaction amount, this will generally replace the preauthorization hold. At a gas station, this often happens within several hours of your purchase, and may occur just a few minutes after you drive away. For example, when you insert your debit card to get started at the pump, the gas station may place a $175 debit card hold on your account. Shortly after you finish pumping, the gas station will transmit a final transaction amount (likely considerably less) your credit card issuer, which will remove the hold and replace it with the actual amount that you spent.

Other types of debit card holds are likely to last longer, often 72 hours. Restaurants sometimes hold an amount equal to 20% for several days to cover the amount of a tip, which may be processed manually hours or days after your meal.

Hotels will frequently charge you the equivalent of one night’s stay or ask you to explicitly authorize a hold for several hundred dollars when you check in. Rental car companies also hold an incremental amount above the cost of your reservation in case you have any charges for tolls or fuel. The preauthorization holds will remain on your account until your bill is settled when you checkout of your hotel or return your rental car.

How to remove a debit card hold

If you have a debit card hold placed on your account, you don’t need to do anything to have it removed. Preauthorizations are categorized as temporary or pending transactions, so the funds will be returned to your account once the amount of your charge is finalized.

If you need to remove a debit card hold more quickly to avoid overdraft fees or access your funds, you have limited options and your bank is unlikely (and often unable) to be helpful. Your best strategy is to contact the merchant directly to ask them to expedite processing of the final transaction. For example, a restaurant may have placed a hold on top of a large dinner tab to account for a potential tip and the manager may not have gotten around to reviewing your final bill just yet.

In some cases, you may be able to replace your payment method to get a debit card hold removed. If you are staying at a hotel, you could provide a credit card or other form of payment to cover extra charges and have the front desk release the hold on your debit card.

Avoiding overdraft fees from debit card holds

Go2Bank debit card overdrafts
Apps like Go2Bank can help you avoid overdraft fees from debit card holds and other transactions

The surefire way to avoid debit card holds is to not pay with your debit card. Paying with cash or a credit card will prevent merchants from freezing part of your bank balance, though this isn’t always a convenient option.

With gas stations, you can often avoid holds by prepaying for a set amount of gas, too. If you pay for $50 worth of gas with the cashier instead of using your debit card for fill up at the pump you’ll generally avoid holds.

Be informed about when you may be subject to to a debit card hold, what the amount is and how long that hold is likely to last. Many gas stations list their debit card hold policy on a sticker on the pump (though this isn’t a legal requirement in most areas), so it’s helpful to take note of this or ask the cashier for the hold policy if you are concerned about not having access to your full bank balance.

Avoid using a different payment method to settle up any purchases that created a hold. The merchant will need to put two separate transactions through their card processes to complete the sale and remove the hold from your debit card, which could cause additional delay.

Finally, be sure to set alerts and closely track your bank account balance if it’s getting close to zero and you’ve made a purchase at a gas station or restaurant, or are traveling. You may also want to explore apps like Chime or Go2Bank which can provide you with up to $200 in no-interest, no-fee overdraft protection.

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