A debit card hold is a freeze on funds associated with a debit card until a transaction successfully clears or “settles,” in banking terminology. Holds are used to ensure that customers have enough money to cover transactions. Banks have individual policies on how long funds can be held in this way, and commonly holds are in place for less than 24 hours although they may last up to a week. Similar holds, also known as blocks or preauthorizations, can also be seen with credit cards.
Common situations where a debit card hold may be used include buying gas, renting a car, eating at a restaurant, and renting a hotel room. Merchants in these cases are allowed to hold funds over the amount of the estimated transaction to ensure that the customer has enough money to cover the transaction in full. At a gas station, for example, a large hold may be placed on the chance that the customer is filling a big gas tank. At a restaurant, a preauthorization in the amount of the bill plus an estimated percentage for gratuity will be made.
Until the hold is dropped, the funds will not be available to the customer. This can create an overdraft fee for a customer who is not aware that funds are being held. The customer might assume that funds are available for another transaction, and if the customer has authorized overdrafts on that account, the transaction will go through and the customer will be charged. Holds can also create confusion, as people may check with the bank and find a pending transaction that they do not remember authorizing in an amount that does not sound familiar.
A debit card hold will show as a pending transaction. The bank may not have information about whether the transaction is a hold or not. When the merchant settles, which can take several days, the merchant sends the bank the actual amount of the transaction, the hold is lifted, and the real transaction goes through. Sometimes, people may encounter situations where two pending transactions show. One transaction is the real transaction in the expected amount, and the other is a debit card hold.
Holds can be alarming for consumers and people may believe that their transactions were processed improperly if they happen to check on their accounts while funds are being held. They can also become a nuisance for consumers who don't have substantial funds on deposit because the hold can push the account balance dangerously close to zero. When people are involved in transactions that may be associated with holds, they should ask the merchant if holds are used. If they are, it is appropriate to ask how much money will be held and for how long, so that people can plan around the debit card hold or make alternative plans for payment.