Some merchants may also place an authorization hold when you make a reservation for goods or services. For example, if you book a hotel room, the hotel may place an authorization hold on your card to ensure that you have the funds available to pay for your stay. Once you check out of the hotel, the authorization hold is converted into a regular charge.
If you use a credit or debit card to pay for goods or services, it's important to be aware of authorization holds and how they can impact your available credit or funds. If you're not careful, you could end up with insufficient funds to cover other transactions, resulting in declined charges and potential fees from your bank.
What is an authorization hold?
An authorization hold is a temporary charge on your credit or debit card that the merchant submits when you make a purchase. This type of hold allows the merchant to verify that the card is valid and that you have the necessary funds available to cover the transaction. Once the transaction is processed, the authorization hold is converted into a regular charge.
How long does an authorization hold last?
The length of time an authorization hold lasts depends on the merchant and the type of purchase you make. For example, a hotel may place an authorization hold that lasts for the duration of your stay, plus a few extra days to account for any additional charges you may incur, such as room service or laundry. A gas station may place a hold that lasts for a few days, until the final charge is processed.
In most cases, an authorization hold will appear on your account within a few days of the transaction and will disappear within a few weeks. However, it's important to keep in mind that the hold may take longer to appear or may not be released until after you've received your next statement.
What are the consequences of an authorization hold?
If you're not careful, authorization holds can cause problems. For example, if you have a limited amount of funds available in your account, an authorization hold could prevent you from using those funds for other purposes. This could result in declined charges and potentially overdraft fees from your bank.
To avoid these problems, it's important to keep track of your account balance and make sure you have enough funds available to cover any potential authorization holds. You should also be aware of the policies of the merchants you do business with. For example, some merchants may place a hold on your card even if you don't have enough funds available to cover the entire transaction. In these cases, it's important to know how long the hold will last so you can plan accordingly.
If you're ever unsure about an authorization hold, or if you think a merchant has placed a hold on your card without your knowledge, you can always contact your bank or credit card issuer for more information.