Our real-time banking system allows for up-to-the-minute changes in your checking account balance, so itís important to know exactly what funds are available to you each time you make a debit card transaction. Below are some points that can help you understand how your balance is affected when you use your debit card for certain types of purchases.
What is a debit hold?
Most of the time when you use a check card, the store or business that takes your payment requires an authorization from the bank before they will accept your card. When the bank gives that approval, this Ďpre-authorization holdí will reduce, or place a hold on, your checking account balance. The hold remains until the money is actually transferred, usually from one to three days after the purchase.
What determines the amount of a debit hold?
The amount of a hold is determined by the store or business where you made your purchase. Itís important to note that the hold amount can be different from the actual purchase amount. This is often the case at the gas pump or at a restaurant, where the final price is unknown at the time your debit card is approved.
How can a hold affect my available balance?
If a merchant approves a debit that is more than your actual purchase (to allow for a tip at a restaurant, for example), there could be a hold on some of the funds in your account that you thought were available. If you donít realize that a hold reduced your balance by more than the amount of your purchase, it is possible to have your debit card denied the next time you try to use it, or you could enter an overdraft situation.
How can this problem be avoided?
Itís always acceptable to ask a business if they require a pre-authorization debit hold, and to find out how much the hold is for or how itís calculated. Then, youíll have an idea how much of your balance is blocked until the actual purchase amount is processed. If you have concerns about being overdrawn, ask someone from your neighborhood bank office about products that can help in this area.
What types of businesses typically use debit holds?
Debit card holds are most commonly used by restaurants and convenience stores that sell fuel. Some gas stations use a standard hold of $1, while others place larger holds. Many restaurants figure a certain percentage for a tip into their hold amounts. The largest hold amounts, however, may be required when you stay at a hotel or rent a car (to allow for unforeseen or extended purchases). Some of these businesses, in fact, do not even accept debit cards.
How will a hold appear on my online account?
When you access your Bank@Home account soon after making a debit card purchase, you may notice a transaction with a Ďpre-authorizationí notation along with the name of the merchant. This shows the amount of the debit hold, along with your updated balance. The hold will remain until the actual purchase is posted to your account. When the payment is transferred, the hold will drop off, so that your actual purchase alone shows on your long-term records.
If you have questions about debit card holds and how they work, please contact our Electronic Banking Department at (615) 443-6105.