As Gas Prices Surge, Stations Now Hold Up to $175 of Your Money When You Swipe
Higher gasoline prices have led stations to raise the holds they put on cards by as much as 40%, a change that means overdraft risks for some
June 27, 2022
Historic Gas Prices Could Stay High for a While. Here’s Why.
U.S. gas prices have hit a record high and are showing no signs of going down. That’s largely because oil companies are no longer incentivized to drill more as oil prices rise. WSJ’s Dion Rabouin explains.
When drivers insert a credit or debit card at the pump, the gas station doesn’t know how much fuel they will buy and it places a hold on the account for an amount set by the gas station. Merchants authorize the payment networks to lift the hold once the final total of the payment is determined, though the holds can take hours and sometimes longer to settle—raising risks of overdraft penalties for debit-card users and eating into credit limits during the holds.
Visa and Mastercard raised the limit for gas station holds from $125 to $175 earlier this year. The holds are set based on the largest allowed gas transactions. But as gas prices rose, $125 was no longer enough for customers with larger vehicles to fill up their tanks on a single transaction, a Visa spokesman said.
Inflation is driving the increases. The nation’s average price for gasoline reached a record-topping $5 a gallon this month, before dropping slightly, and the costs of everything from groceries and housing to haircuts have jumped in recent months, chipping away at Americans’ spending power.
A pre-markets primer packed with news, trends and ideas. Plus, up-to-the-minute market data.
Card holds work like security deposits: Banks allow merchants such as gas stations to use these preauthorization holds to ensure that customers have enough money in their own account to settle payment when the transaction is complete.
For credit-card users, the hold will count against your total available credit line until the transaction settles. For those using debit cards at the pump, your account balance will decline until the transaction settles. This means buying $40 in gas could temporarily show up as a $175 purchase on your account.
“When you set a hold that is a high number, it increases the likelihood that a consumer will overdraft because of that hold. However, if you set a number that’s too low, you also risk not getting paid for that transaction,” said Jeff Lenard, vice president of strategic industry initiatives at the Association for Convenience & Fuel Retailing, a trade organization.
Rental-car agencies and hotels also use holds, since the businesses and banks want to make sure they are covered in case the final bill is much higher than the initially expected amount.
Gas-station holds are typically lifted in two hours, according to Mastercard and Visa, but some debit-card holds might last longer based on the network the merchant is using.
Most customers will never notice these holds unless they happen to check their balances, but if debit-card users don’t have enough money in their checking account to cover the amount of the hold, the transaction may be declined or they may have to pay overdraft fees. Credit-card users could temporarily max out their credit limit until the transaction clears. On social-media platform Reddit, some customers said they initially thought the $175 holds must be fraudulent.
To avoid issues with holds on debit cards, check your available account balance or pay in advance at the register.
Gas stations determine the hold amount at the pump, but the upper limit is set by card networks such as Mastercard and Visa. This means that the hold amount may vary based on the gas station, but the maximum hold you can see on your card is set by the networks.
Drivers filling their tanks are often unaware of the higher holds.
“I don’t really notice,” said Freddy Sanchez, 34 years old, while buying gas in New York Friday. “But the last thing I need is a hold for something I didn’t purchase.”
The nation’s average price for gasoline reached $5 a gallon this month, putting many fuel purchases above the previous $125 threshold on card holds at gas stations.
www.wsj.com
Higher gasoline prices have led stations to raise the holds they put on cards by as much as 40%, a change that means overdraft risks for some
June 27, 2022
Historic Gas Prices Could Stay High for a While. Here’s Why.
U.S. gas prices have hit a record high and are showing no signs of going down. That’s largely because oil companies are no longer incentivized to drill more as oil prices rise. WSJ’s Dion Rabouin explains.
When drivers insert a credit or debit card at the pump, the gas station doesn’t know how much fuel they will buy and it places a hold on the account for an amount set by the gas station. Merchants authorize the payment networks to lift the hold once the final total of the payment is determined, though the holds can take hours and sometimes longer to settle—raising risks of overdraft penalties for debit-card users and eating into credit limits during the holds.
Visa and Mastercard raised the limit for gas station holds from $125 to $175 earlier this year. The holds are set based on the largest allowed gas transactions. But as gas prices rose, $125 was no longer enough for customers with larger vehicles to fill up their tanks on a single transaction, a Visa spokesman said.
Inflation is driving the increases. The nation’s average price for gasoline reached a record-topping $5 a gallon this month, before dropping slightly, and the costs of everything from groceries and housing to haircuts have jumped in recent months, chipping away at Americans’ spending power.
A pre-markets primer packed with news, trends and ideas. Plus, up-to-the-minute market data.
Card holds work like security deposits: Banks allow merchants such as gas stations to use these preauthorization holds to ensure that customers have enough money in their own account to settle payment when the transaction is complete.
For credit-card users, the hold will count against your total available credit line until the transaction settles. For those using debit cards at the pump, your account balance will decline until the transaction settles. This means buying $40 in gas could temporarily show up as a $175 purchase on your account.
“When you set a hold that is a high number, it increases the likelihood that a consumer will overdraft because of that hold. However, if you set a number that’s too low, you also risk not getting paid for that transaction,” said Jeff Lenard, vice president of strategic industry initiatives at the Association for Convenience & Fuel Retailing, a trade organization.
Rental-car agencies and hotels also use holds, since the businesses and banks want to make sure they are covered in case the final bill is much higher than the initially expected amount.
Gas-station holds are typically lifted in two hours, according to Mastercard and Visa, but some debit-card holds might last longer based on the network the merchant is using.
Most customers will never notice these holds unless they happen to check their balances, but if debit-card users don’t have enough money in their checking account to cover the amount of the hold, the transaction may be declined or they may have to pay overdraft fees. Credit-card users could temporarily max out their credit limit until the transaction clears. On social-media platform Reddit, some customers said they initially thought the $175 holds must be fraudulent.
To avoid issues with holds on debit cards, check your available account balance or pay in advance at the register.
Gas stations determine the hold amount at the pump, but the upper limit is set by card networks such as Mastercard and Visa. This means that the hold amount may vary based on the gas station, but the maximum hold you can see on your card is set by the networks.
Drivers filling their tanks are often unaware of the higher holds.
“I don’t really notice,” said Freddy Sanchez, 34 years old, while buying gas in New York Friday. “But the last thing I need is a hold for something I didn’t purchase.”
The nation’s average price for gasoline reached $5 a gallon this month, putting many fuel purchases above the previous $125 threshold on card holds at gas stations.
As Gas Prices Surge, Stations Now Hold Up to $175 of Your Money When You Swipe
Higher gasoline prices have led stations to raise the holds they put on cards by as much as 40%, a change that means overdraft risks for some.
www.wsj.com
