Who’s Responsible for Debit Card Holds?

Is it the banking and credit card industry, or the retailer? The answer is obvious.

July 05, 2022

Paying for gas with a card

By Jeff Lenard

ALEXANDRIA, Va.—Debit card holds placed on fuel purchases are back in the news. These temporary holds of up to $175 (previously $125) are placed on a customer’s bank account when they purchase fuel, regardless of the amount of the fill-up. As the coverage has amped up, so has the misinformation.

Let’s start by addressing the most important question: Who is responsible for the hold? Is it the banking and credit card industry, which has your money and writes and polices the hundreds of pages of rules that dictate credit and debit card usage without much government oversight? Or is it the retailer?

The answer is obvious, but first let’s go through a bit more detail on why holds exist.

What Are Holds?

In most retail circumstances, the payment amount is known at the time of checkout. At the grocery store, a customer pays after all items have been scanned and bagged. It’s the same process at most other retail outlets, whether you are paying for a meal, clothes or some other item, either in a store or online.

But there are exceptions. Holds are placed on card purchases when the final amount of the purchase is unknown at the time of card authorization. One situation where that applies is at the pump.

Holds are intended to represent the largest possible fill-up that could occur, and because of higher gas prices, Visa and Mastercard upped the holds to $175 in April 2022. This became the de facto standard at most retail stations in June.

Holds are placed on both credit and debit cards, but because at times people have low balances in their bank accounts, holds on debit cards can have significant ramifications.

Holds also are placed when you check in at a hotel or rent a car. It’s increasingly rare to find a hotel or car rental service company that accepts debit cards at check-in because holds can be $500 or more.

One more point of clarification: There are two charges that hit your account when you purchase gas. One is an “authorization” charge, typically for $1. This charge isn’t permanent and is later removed. Its purpose is to make sure that the card being used is a valid one. The second charge is the “hold,” which is required to make sure you have money to cover the transaction.

Read more about how holds are set and what customers can do about holds in this month’s Convenience Corner blog post “Who’s Responsible for Debit Card Holds?”.