Updated August 1st, 2022
An authorization hold is one of the more common things we hear about from Cardholders and is when the amount available on your card to spend is reduced by any pending transactions. Sometimes, transactions like car rentals, hotel rooms, or pay at the pump require a pre-authorization, which means a hold is placed on some of your funds until they know the final amount owed.
Let's say one morning you get up, you get ready for work, and stop for gas along the way. You use your Netspend card to pay at the pump, fill up your tank, and you're on your way. Later in the day you check your balance and notice that your balance is much lower than where you left it! What could have happened?
Well, there is a very good possibility that an authorization hold got placed onto your account. If this does happen, then the funds are generally available after the merchant sends in the final payment of your purchase. If the final payment is not received, the preauthorized hold will remain in place for up to 30 days. Regardless of how much time it takes, it's time that you don't have access to your money, and it can be very frustrating.
How do Authorization Holds Work
When a customer uses their card, a merchant (i.e.- online retailer) will let the card issuer know how much the transaction will be in order to ensure that the cardholder has enough funds on their card to make that transaction. In some cases, such as hotels, gas stations, etc. there will be an estimated authorization put onto your card, since the total transaction amount is often not known until after that transaction is complete. Pro Tip- be sure to monitor your card after the transaction is complete (or canceled) and make sure that the merchant properly lifted the authorization hold.
How to Best Manage Authorization Holds
Here are some tips to minimize the impact of authorization holds.
- Pay inside instead of at the pump – When you pay the cashier inside, you can specify the amount of gas you want to pay for. That way, your card will only process that exact amount.
- Find out how much the hold is – When booking a car rental or hotel room, call the business and ask them how much the authorization hold will be so you aren't surprised by the amount later
- Plan for the hold – If you know you have a trip coming up and will be making reservations with your card, plan ahead to make sure you have sufficient funds to cover the cost of the hold and any other expenses, especially bills, you expect to coincide with the authorization hold
- Know that authorization holds can be either more or less than the actual transaction amount. Plan accordingly. Gas stations are pretty well known for this, as they will sometimes place an estimated hold that is larger than what the actual transaction will be. Say that you decide to fill up your car with gas and the gas attendant puts a $100 hold onto your card, but the actual transaction amount was closer to $50. This means that your card will be temporarily limited more than what was actually spent.
Authorization holds aren't always avoidable, but planning ahead and being aware of when they might occur can help you stay on top of them. Also, remember to not view authorization holds as a bad thing, as they can often be the first step in noticing possible issues with your account.
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