The Checkout

The Terrible, Horrible, No Good, Very Bad Hold Policies

If you carefully monitor your bank account or credit-card bill online, you may be spotting some surprising and disturbing fees--especially after buying gas. A colleague recently complained about an extra $1 charge she spotted the day after she filled her tank. The charge disappeared the next day.

She was actually lucky. As gasoline tops $3 a gallon, there are reports that consumers are finding $50 to $80 holds on their bank accounts or credit cards after they buy gas, at least until the actual transaction is processed. For some consumers, those holds could result bounced checks or maxed credit limits.

The problem must be pretty prevalent, enough to warrant a "Don't Blame Me" sign at the pump when I filled up my tank this weekend. (That's not really what the sign said, but it might as well have. The sign said the gasoline station wasn't the one putting holds on bank accounts and credit cards, it was the banks. So take any complaints to the bank or credit-card company.)

What's going on? Visa spokesman Jason Alderman said the $1 temporary fee is "standard and valid," a way to make sure the credit-card or debit-card is active and legitimate before a transaction is started where the final price is uncertain.

But, he acknowledged, some merchants charge considerably more to make sure they are protected if the card is fraudulent, a practice that Visa discourages.

After Hurricane Katrina, Visa learned of stations placing $80 holds on some cards, Alderman said. The practice faded as the gasoline prices eased but have recently begun to reappear, he said. Alderman said Visa discourages the large-dollar holds and has launched a campaign telling merchants that such holds are unnecessary because they are already protected, up to $50, if the cards end up being fraudulent. (And Alderman said that despite the signs at my gas station, it's typically the merchants, not the banks, that put the hold on the cards.)

Restaurants have even greater protection -- the amount of the meal plus 20 percent (to cover the tip), Alderman said. So they, too, don't need to put holds on credit and debit cards.

Clearly not everyone is getting the message. Just ask San Antonio journalist Jena Heath about her recent tab at the Speakeasy bar in Austin, Texas. Her bar bill was $14; with tip it totaled $17. She paid with her Visa debit card. When she checked her account online the next day, she spotted a $50 debit. She called the Speakeasy but got only a recording. After a long list of upcoming events, the recording briefly stated that there was an automatic $50 fee on all debit or credit-card transactions. That fee would drop off in 5 business days, the recording said.

"That's not good," said Alderman, who noted Visa policies allow only a three-business-day hold. Speakeasy did not return my calls, but as luck would have it, Alderman, who is based in California, was already headed to Austin this week. While there, he stopped at Speakeasy and talked to a waitress, who said the bar's standard policy was to open a customer's tab by swiping his/her card and automatically debiting $50 to the account. The correct amount would be posted a few days later and the $50 hold dropped. Alderman said he told the waitress that wasn't standard Visa policy and said he hoped the bar would change its practice.

Meanwhile, he advised, consumers who spot a hold like Heath's should contact their bank to correct it. "In general, talking to your bank is the right thing to do. They're your advocates in this process and that's their job."

I certainly hope so, but I don't hold out much hope, especially since MasterCard has no policy limiting the dollar amounts of holds. "MasterCard leaves that decision/policy up to its issuers," said spokeswoman April White in an e-mail.

By  |  May 5, 2006; 6:00 AM ET Credit Issues
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Comments

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"Alderman said he told the waitress that wasn't standard Visa policy and said he hoped the bar would change its practice."

Wht was the Visa spokesman talking to the waitress? Shouldn't he have been talking to the manager?

Posted by: Krishna | May 5, 2006 8:36 AM

I still don't get what the big deal is. You aren't really being charged and the merhchants get to cover their butts.

Posted by: gnubk | May 5, 2006 8:57 AM

If a $50 hold on your credit card or a $1 charge is maxing out your card, you've got bigger things to worry about. Sorry, not much sympathy for you here.

Posted by: Tim | May 5, 2006 9:11 AM

I agree that a single hold, even for $50, should be a big deal for most people, but I travel extensively for business and these can add up quickly. Last week, for example, I drove to business meetings in Raleigh, Roanoke and Wilmington on separate days from my home in Fairfax. I used a rental car and purchased gas about 8 times. The total amount of the holds is greater than $500, which includes $250 for the car and I have a similar schedule this week. While I use a separate card that I pay off each month for business expenses, it does not take long to consume a $2500 credit limit when 20% of that is tied up in holds.

Posted by: Lester Burnham | May 5, 2006 9:31 AM

A similar thing happened to me when I was on a business trip out of state last month. Between the hotel vending machine (which only took credit and debit cards!), gas stations, and various other misc. items, the total dollar amount held on my account was over three times what I actually spent. If I had been within $500 of my limit, I would have gone over without really going over, and it was over a week before all the holds were erased.

Posted by: Carolyn | May 5, 2006 9:46 AM

So the gas station's sign was a lie?

Posted by: AKA | May 5, 2006 9:50 AM

And what about when those holds are on a debit card? Instead of just a $50 phantom charge, that's $50 in your checking account that you can't use until the hold is cleared.

Posted by: AD | May 5, 2006 10:17 AM

It is a big deal. Listen, you use a credit card to charge your purchases, not for all this fee nonsense. Far as I'm concerned, it's another nail in the coffin of credit card usage. I'm 2 years away from getting the max rebate on my old GM card, and I've already decided to retire the card after that. I'm planning to stop using any card for casual purchases and go back to cash. I'm getting mostly concerned about the lack of privacy cards afford, and I don't like giving the people watching me a free audit trail of what I do and who I am. And now these fees! And what happens when the retailers start to "forget" to reverse the fee?? Yuck, thanks anyway.

Posted by: Gene | May 5, 2006 10:41 AM

It IS a big deal. IMO, these are unauthorized charges. Why does it make it better that they resolve themselves, so to speak, within a few days? For those few days, there are unauthorized charges on your account.

Posted by: K | May 5, 2006 10:55 AM

What is the deal with these crazy trolls who just hang out waiting for you to post a comment so they can get all anti-consumery on it? This blog has the weirdest commenters. (Well, that's not true - a lot of Washington Post blogs have weird commenters.) Maybe you could use a system like the one at the gawker blogs, where anyone who wants to comment has to sign up first.

Posted by: not a troll | May 5, 2006 11:09 AM

I used to work with a woman who said she used the gas hold to her advantage. If she needed gas on Thursday but didn't get paid until Friday, she would buy gas on Thursday with her debit card and only see the $1 hold. When the actual charge posted to her account, the money from her paycheck was in the account to cover it.

Posted by: ProfessorB | May 5, 2006 11:50 AM

I'm confused - who are the crazy trolls on this blog?

Posted by: Anonymous | May 5, 2006 12:33 PM

I wrote about the policy of holds on the column about overdraft protection last week. This is a reason it is not a bad thing to have as long as you don't abuse it - if you're a person that uses your debit card a lot, you may not realize how many things you purchase are putting holds on your card, making those funds unavailable (even though they are yours), and increasing the risk of bouncing a check.

And to poster calling themselves "not a troll" - what in the heck are you talking about? If you're such a sophisticated blog reader and you don't like it here then don't read it. I honestly can't see what you're talking about - reading through the previous comments yours is easily the weirdest and most pointless.

Posted by: Jason M | May 5, 2006 12:39 PM

Seems like it'd be better to buy gas with your credit card, by the time you get the bill only the actual charge will be there.

If you buy with your debit card then real money is tied up.

Posted by: RoseG | May 5, 2006 12:58 PM

I live in southern Maryland and seldom see holds placed on my debit card. That is not to say Never see them. I believe the answer is stores (owners) should advertise openly that they place holds on cards. If you know it going in, you have a choice.

Posted by: CS | May 5, 2006 1:04 PM

I don't have any credit cards, and use my debit card for everything. That means that my money is unavailable to me for up to five days (which is how long it usually takes), and it's MY money! Not the merchant's! In addition to making my money unavailable without my permission, the merchant is preventing me from receiving interest on it. There's no opportunity for consumer consent here, because the merchants who do this aren't required to inform me in advance that they are tying up more of my money than I consented for them to tie up. For people who truly live paycheck to paycheck, the problems are immediate: if you have $50 in your account and only put $20 worth of gas in your car because you need the other $30 to buy food for your family, you can't spend your $30 on food because the gas station has tied up the money for a week. If you try to buy your family dinner, the bank will hit you with a $30 charge for being overdrawn. There's no justification for that, other than greed on the part of the vendors, and laziness on the part of the banks to prevent these problems.

Posted by: lilia | May 5, 2006 1:34 PM

There are a number of gross inaccuracies related to Visa's comments about how debit holds work. Both Visa and MasterCard require that merchants place "preauthorizations" of $1 on signature debit (check card) and credit card gas purchases. Once the transaction is preauthorized, the bank that issued the debit or credit card places a "hold" on that account. Under all normal circumstances, it's not the merchant who is responsible for continuing the hold, since credit/debit card network rules make it impossible for the retailer to extend the hold. And merchants have nothing to gain from holding on to consumers' money - it freezes accounts that could be used to spend money in the store. Further, merchants do not benefit from fees incurred from overdrafts that happen as a result of unanticipated holds. The issuing bank, however does stand to gain from overdraft fees. Calling the issuing banks the "advocates" in this process is laughable if it weren't so painful to too many consumers today. A quick Google search can easily find many resources refuting Visa's misstatements, including this:
http://www.chasepaymentech.com/newpaynewrecdevtrudebhol.do


Posted by: Jeff Lenard | May 5, 2006 3:08 PM

Use cash. Simplify, man, simplify.

Posted by: JK | May 5, 2006 4:01 PM

"anti-consumery"

This? Is an awesome new word. I plan to work this into my vocabulary.

"Not a Troll" is talking about the annoying types who offer reductive analyses and solutions to the consumer They get all "If you didn't [insert simplistic analysis] you wouldn't have these problems!" and "No sympathy!" or "Get over it!" Here s/he probably referred to:

"If a $50 hold on your credit card or a $1 charge is maxing out your card, you've got bigger things to worry about. Sorry, not much sympathy for you here."

which, as other posters have pointed out, ignores the larger picture of how these fees add up, especially over the weekend. Of course there is more than one way of looking at the situations discussed on the blog, and I certainly don't believe the customer is *always* right. But a thoughtful response is much more helpful than a glib, it-could-never-happen-to-me riposte.

Posted by: NYC | May 5, 2006 4:51 PM

I don't understand why the holds can't be released immediately. I know I see holds still on my card after the proper transaction amount has gone through. It seems like banks have no problem charging/debiting your account right away but take their time when issuing you a credit.

Posted by: Clueless | May 5, 2006 5:58 PM

I haven't seen this problem at all and only have a debit card.
Maybe everyone should bank at Provident like me?

I'll pay for more things with cash just in case.

Posted by: Diana | May 7, 2006 5:57 PM

Speaking of credit cards.... what's the deal with the IRS' credit card processor being allowed to pass long the VISA/MC discount fee directly to the consumer as a "convenience fee." Charing more for credit than cash is a clear violation of Visa/MC regulations, but they look the other way for Uncle Sam while no feds are going to press a case against their own!

Posted by: bigolpoofter | May 8, 2006 1:39 PM

Whether the money is just saving their own behind or not, that doesn't matter. If something costs $20.00, thats how much you should be able to touch in my account. Just because I used my card does not authorize anyone to hold my money for five days. Visa and Mastercard state that they will cover the merchants should the card be stolen, etc. So why are they taking more of my money?

Clubs are especially nasty about this. I ran my card to buy 2 drinks coming to about 10 dollars. They put a hold on my account for three days totaling 100 dollars. That is absolutely rediculous. What if 100 bucks wasn't there?? I'd be screwed. They're not a bank, they are a merchant so they should not have this power... oh wait they don't, they are just abusing the rules a little bit. I'm a visa card owner and I HATE using my card because of this crap; Doesn't Visa care that they're pissing off their customers?

Posted by: Butler | May 17, 2006 12:41 PM

I've noticed that no one has pointed out an important fact here -- the banks recogize, albeit after the fact, that the money was never really gone from the account whenever holds are placed. At times when I have had numerous holds placed simultaneously, and later, checks clearing at the close of business, my online balace has actually reflected a negative number; however, I have never been charged a fee by my bank, because, after a day or so, the correct amount is inserted, retroactively, in place of the $XXX that was being held.

That said, it's 2006, and I have no doubt that the technology exists to elimate the holds; what's most likely lacking is the will on the part of the banks, for which such new technology might add a few cents worth of processing fees to their costs.

Posted by: tby2000 | May 26, 2006 4:40 PM

I recently tried to book a plane ticket through orbitz.com that would cost a couple thousand dollars. I had slightly less than double the amount needed available. Orbitz place a hold equal to the entire amount of the ticket!!! And then, they didn't sell me the ticket because the actual charge was declined! And despite my requests, they will not call my bank to cancel their "soft charge," which they will hold for up to seven days. Do you think this is reasonable? And does anyone know if I should expect this problem with other booking sites also?

Posted by: kristin | September 4, 2006 9:02 AM

Got my first taste of holds last night at the House of Blues (New Orleans) bar...

$550 held for a less than $20 tab. That's not a typo.

I think it's criminal. I am just thankful I wasn't on vacation, nearing my limit, or using a debit card. We'll see when this one clears.

Posted by: hate holds | September 6, 2006 11:18 AM

I ran my debit card for gas, took all the money for my gas 40.00 plus 75.00 hold, paid my att bill, 50.00 plus 15.00 hold, paid my tmobile 50.00 plus 15.00 hold. I didn't get the held money for 5 days. I had my debit card for my commission, I ran 1 transaction and it was DENIED for 30.00 lol with 930.00 on the card!! and they have held ALL 930.00 for get this going on 6 business days. This is on 2 different visa cards and I am so mad I can't see straight. They have every dime of my money tied up for a week now. I have no money for food, gas, kid's lunch nothing all because they refuse to lift the holds. This in my opinion is criminal. How can you hold something that's denied? Come on now give me a break. I don't run a business but I am a single mom without that much income and this stuff every month is really getting me in predicuments. Visa's not there for me when the rent is due for darn sure, I called them to release the holds and they get real flippanty with me on the phone about the 7-10 day holds like it's nothing, well it is when you are completely out of money because of them. I hate these cards it's out of hand and something should be done about them which is why I was reading the posts here. Some of these are absolutely outrageous, like the 550 held for a 20.00 tab, that is insane? Well so is hold 930.00 for 10 days over a declined transaction for 30.00 like mine was lol. I don't even know where to complain does anyone know?

Posted by: Jennifer | September 12, 2006 9:10 PM

Jennifer, I think the best you can do is talk with the issuing bank. I'm sure you already have, but that seems to be where most of the action occurs, and where the "money" is eventually tallied up correctly.

I have had the same problems recently and the credit union I use has been cooperative with removing fees. Three times in six weeks a gas purchase has caused an overdraft in my checking account. When I ask my bank or the merchants, the answer is always vague and ignorant. Based on a link provided by another poster it seems that PIN based purchases are MUCH better at avoiding these issues. PIN transactions occur almost immediately, thus avoiding holds as the actual amount is transmitted to the issuing bank within seconds.

I think this practice is deplorable. I really think it's funny that some in this forum find nothing strange about it all and have no sympathy for those who are charged additional fees for overdrafts. Apparetly, money isn't an issue for them. ;)

Posted by: Evan | September 19, 2006 4:55 PM

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