If you’re tempted to think all debit cards are created equal, don’t be so sure. The practice known as a debit hold can cause you to lose the use of your funds for varying periods of time, maybe for as little as a day, but possibly up to 15 days. Virtually all companies that issue debit cards allow this practice, but who can do it and how long they can tie up your finds differs from bank to bank. Knowing what you’re up against and shopping around before choosing a debit card can help to keep you from having purchases declined.
Debit Card Basics
When you use your debit card, you can expect that the amount you’ve spent will be deducted from your account balance immediately. If you have $100 and then spend $25 at the store, it is reasonable to expect that your account will show your available balance as $75. Your purchase may show as pending, but the $25 was authorized and the funds were immediately blocked so that you can’t accidentally spend the money twice.
In some cases, a debit hold may be placed on your account for more money than you actually spent. Certain types of businesses, such as gasoline stations, rental car agencies and motels, do this routinely, because your total purchases are unknown at the time you present your card. If, for example, you use your debit card to pay for gas, the station will pre-authorize a set amount, such as $40, to make sure the merchant gets paid. The end result of this is that you may be expecting to have $75 left in your account, and you do – sort of. The problem is, you can only use $60 of it as long as the hold is in effect. Motels frequently do the same thing, pre-authorizing considerably more than the cost of the room to cover calls, an extended stay or room service.
Before choosing a financial institution to handle your debit card account, do some checking around. One of the most important factors to consider is how long of a debit hold the bank allows. You’re likely to find that most agencies routinely allow debit holds anywhere from one day to three or four days. This is typically linked to how long it takes to actually transfer the money to the merchant. It’s in your best interests to choose the financial institution that has the shortest debit hold time. Also ask what kind of businesses are allowed to place a debit hold on your funds, and go with the bank whose options fit your needs the best.
Always ask a merchant if they place a debit hold on your funds and, if so, for how much. It is the merchant, not your bank, that determines this amount. To stop a debit hold from happening, always use your personal identification number to authorize your purchases. When you use your PIN, the amount is processed the same day and no hold is placed on your funds. If you have used your card to reserve a motel room, be sure to use the same card when you check out. By doing that, you can interrupt a debit hold and get the amount processed quickly. If you use another payment method, the hold from when you checked in might last for up to 15 days, and you won’t be able to access those funds during that time. You can also ask to have this hold removed when you check out and pay your bill.
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