Q When I use my debit card to buy gas at the pump, I've noticed that a hold gets put on funds in my account for a few days — sometimes for more than what I purchased. What gives? Is there any way to avoid this?
A Paying for gas right at the pump is a convenience many people have come to enjoy and expect, but what many people don't know is that a hold of up to $75 can be put on your bank account — even if you bought only $50 worth of gas. And it can take a few days to clear.
To protect merchants from fraud, an authorization is sent to the bank when a debit card is used at a self-pay pump. That triggers a hold of funds, which then has to be reconciled with the final purchase amount.
With gasoline prices around $4 per gallon in much of the nation, it's no longer unheard of to have a full tank cost more than $75, the usual limit for debit-card holds. That means some people using debit cards to fill up can get cut off when their bill hits that level.
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Visa Inc., the largest payment-processing network in the country, said last month that it would make changes in its systems in autumn to allow debit-card payments from gas purchases to clear much faster, usually within a few hours. It plans to allow merchants to authorize larger amounts, in line with what customers in their market typically pay to fill up.
Consumers Union, a non-profit consumer-advocacy organization that publishes Consumer Reports magazine, praised Visa's move and called on gas station owners to take advantage of the faster clearance system, and also for MasterCard Inc. to follow suit.
MasterCard hasn't yet said whether it would also speed up its own payment-clearance system for gas pumps. The company said in response to a query that it "continues to evaluate and develop ways in which our network can be improved for the benefit of consumers, merchants and issuers. This includes, but is not limited to, addressing and minimizing 'hold' periods on debit- and credit-card transactions."
In the meantime, gas buyers can avoid the debit-card holds altogether by simply paying inside with the cashier after filling up, said Gail Hillebrand, senior staff attorney with Consumers Union. If you pay with a debit card and use your personal identification number, the transaction will clear right away.
For gas stations, taking advantage of Visa's new fast-clearance system for debit cards will require upgrades to their payment-processing systems, but it's not yet clear how much it will cost, said Jeff Lenard, spokesman for the National Association of Convenience Stores, a trade group representing gas stations.