Pre-authorization charges are a common practice when a vendor (a gas station, a hotel, or a rental car agency) doesn’t know exactly how much of their service you’re going to pay for. The hold ensures that the vendor will get appropriately paid after you’re done, but this can put consumers in a tough spot.
Extra Charges
You may have discovered an extra $90 charge on your card after you get gas at your local station. Sometimes, the transaction can last for days before it reverts to the actual amount you spent at the pump.
There are many news stories of this happening to people, whether they stop for gas at a chain station or a mom & pop location. They pay the amount they intended for the transaction, plus an additional charge for much more that they didn’t plan on spending, but it appears as two different charges on their statement or in their online banking account.
Pre-authorization Holds
What happens is when you use your debit card at a pump that does not require a PIN, your bank freezes an amount on the card (also known as a pre-authorization hold). This hold is placed for up to 72 hours, at which point the gas station conducts a “batch” transaction that tells the bank how much the actual amount of the gas transaction was.
How long the hold is depends on the bank. Many banks will tie up your cash for days. The exception is Current members, who get gas holds instantly returned to them.
The amount of the hold depends on the gas company. Every gas company has its own policy regarding how much money it blocks, ranging from as little as $1 all the way up to $90.
This is because when you pull up to the pump, the gas company does not know how much gas you’re going to buy. The gas is not like an item in their convenience store, which has a pre-set price.
To recoup their losses from people trying to willfully pay with cards linked to accounts with insufficient funds, the gas companies place a hold on a set amount of your money. This protects the gas companies and ensures that they get paid for the gasoline you buy from them.
It is normal for some gas stations to do this for first-time buyers from that particular station, as was the case for a couple in Cleveland who found themselves with a $151 hold.
Security Measures
This security measure only applies if you don’t use a PIN number at the pump. PIN-based debit transactions are carried out immediately, so the bank doesn’t need to reserve additional funds on the off-chance that you’re going to skip out on what you owe.
This is a standard practice for industries where the vendor is not always sure how much to charge you at the point of sale. When you rent a hotel room or a car, the respective vendor has a similar arrangement with a bank and places a pre-authorization hold on your account. Assuming you leave the hotel room or return the car without incurring additional charges, the hold is then removed and you are left with exactly the amount you intended to pay.
Consumer Problems
However, consumer advocates aren’t fans of pre-authorization holds because this can put an undue strain on a person’s bank account. People who often live paycheck to paycheck might not have a lot of money in their account and can’t afford to have an additional $90 charge for gas, for no fault of their own. Even if the money is eventually returned to them a few days later, it could cause them to overdraft their account and thus incurring additional fees. The exception is Current members, who are able to overdraft up to $200 with no overdraft fees.
Some banks have set up systems so their debit card users won’t have any bounced checks if their holds are released on the same day they happen. This is not used by all banks, and consumer advocates warn that when you pay at the pump without a PIN, you’re exposing yourself to the risk of a lot of your money being temporarily unavailable for days at a time. The one exception to this is Current. We instantly return those held funds to members so your cash isn’t tied up.
Protecting Yourself at the Pump
There are some things you can do to protect yourself from the gas pump taking more than you paid for.
- If you have to use a debit card, pay where you can use your PIN number since PIN-based transactions are processed immediately.
- Use a Current account, which offers instant gas hold returns for members.
- Using a credit card will avoid the risk of a pre-authorization hold (although there are still fees when using credit).
- Paying by cash avoids this problem entirely, and some gas stations even offer minor discounts on cash transactions.
- If you have a gas company’s proprietary charge card, you might not have to pay a pre-authorization hold amount.
By following one or more of these methods, including using Current, and keeping a close eye on your bank account, you can avoid the unpleasant surprise of the gas pump taking more than you paid for.
References
'The Gas Station Put a Hold on All My Money:' How to Get Around the Gas Pump Hold Fee. (September 2020). WFMYNews2.
Column: Why Gas Stations Charge Your Debit Card More. (March 2018). Gaston Gazette.
Pilot Gas Customer Upset About $151 Hold on Credit Card When Buying Gas: Money Matters. (March 2019). Cleveland.com.
Here’s Why Hotels Put That Mysterious ‘Hold’ on Your Credit Card. (December 2014). Money Talks News.
Consumers Find Themselves “Held Up” at Gas Pump. (October 2013). 10WBNS.
FAQs
Some businesses (like gas stations and hotels) will place a temporary charge on your payment card. Since pumping gas is an open-end purchase, gas stations will typically pre-authorize your payment card for a larger amount to ensure that your card has enough funds to cover the amount of gas you'll leave with.
Why did the gas station charge me more than I paid? ›
When a consumer uses a credit or debit card to purchase gas, there is an authorization hold placed on the card. An authorization hold is the practice of authorizing electronic transactions of a specified amount (usually more than the expected transaction amount) and holding this balance until the transaction clears.
What happens if you get more gas than you paid for? ›
The good news is that you ultimately won't have to pay for more gas than you actually take from the pump. But the bad news is that the hold placed on your credit card for that larger amount could last several hours, or even several days.
Why did I get overcharged at the gas station? ›
Gas stations put a hold on the card to make sure you have the money to cover what you bought. Sometimes it takes a while to process, so they hold an amount they know is more then what you owe. (It's a hold, so you're not actually paying more.).
Why did the gas station charge me $300? ›
Gas stations will place a temporary authorization hold for $300. The total amount of your gas transaction will be charged later in a separate transaction that releases the authorization hold of $300.
Is the $175 hold for gas? ›
As gas prices rise, the hold on customers' cards at the pump increased from $125 to $175. Having a higher price hold increases the risk of overdraft fees for some consumers. Checking your account balance or paying before you pump are ways to avoid issues with gas holds.
How long do gas stations put a hold on your card? ›
Pre-authorization holds can frustrate consumers who rely on their debit cards for day-to-day transactions, because the hold can tie up funds, and unsuspecting consumers may have other transactions declined until those funds are released. The charge can remain on your account for one to seven business days.
Why did the gas station charge me $125? ›
$125.00 used to be the maximum hold charge but due to rising gas prices, Visa and MasterCard raised it to $175. The exact hold fees are set by individual gas stations. How to avoid the hold fees is to always use credit as opposed to debit.
Why did a gas station charge me $100? ›
Since pumping gas is an open-end purchase, gas stations will typically pre-authorize your payment card for a larger amount to ensure that your card has enough funds to cover the amount of gas you'll leave with. This pre-authorization is typically $100.
What happens if you overpay at the gas station? ›
Chip Lupo, Credit Card Writer
If you prepay too much for gas with a credit card, you will only be charged for the purchase amount and the remainder of the prepaid amount will not be charged to your card. The gas pump will stop when you reach the prepaid amount or when the tank is full.
You can dispute an error on your credit card bill by phone, online, via an app or by mail with most credit card issuers. The Fair Credit Billing Act (FCBA) gives you the right to withhold payment for the disputed amount until the dispute is resolved (within 90 days).
How long does it take for gas stations to charge your card? ›
Chip Lupo, Credit Card Writer
Gas stations can take between 2 hours and 3 days to charge your credit or debit card when you pay at the pump. The gas station may place a temporary hold on your card for up to $175 until the final purchase amount is charged to your account.
Does pay at pump take money straight away? ›
Once the transaction is complete and you've finished filling up your car, your card issuer should release any unused money almost immediately. However, it's been reported that in some instances it may take longer for the amount to reappear on your banking app.
Why did I get charged extra at the gas pump? ›
Pre-authorization charges are a common practice when a vendor (a gas station, a hotel, or a rental car agency) doesn't know exactly how much of their service you're going to pay for.
Why did gas station charge more? ›
Why do gas stations tack on these extra charges for card transactions? According to the Association for Convenience and Petroleum Retailing or NACS, it's because credit card companies collect on average about 2.5 percent of every card transaction processed.
How long is a temporary hold on a debit card? ›
The merchant determines the amount of the hold. Typically the hold stays on your account until the funds are transferred to the merchant from your financial institution, often 3-4 days. If you look at your account online it may show as a pending transaction.
Why did the gas station charge me an extra $100? ›
Since pumping gas is an open-end purchase, gas stations will typically pre-authorize your payment card for a larger amount to ensure that your card has enough funds to cover the amount of gas you'll leave with. This pre-authorization is typically $100.
Why do I have an extra charge from the gas station? ›
Gas stations are in fact legally allowed to charge a customer extra if they choose to use a credit card to purchase gas. This is because the gas station owners pay an interchange fee to the payment networks.
What if my credit card is charged more than the receipt? ›
Call the number on the back of your credit card, log in to your online account, or send a dispute letter to your credit card issuer. Sending copies of any receipts or documentation supporting your claim will help you resolve the issue quickly.
What is the $100 hold at the gas station? ›
The $100 hold ensures that there are enough funds on your card to pay for gas. When you're finished pumping, the station will charge you for the actual purchase amount, and the $100 gas hold will be released once the transaction is completed, which can take several days.
