How a $40 Gas Purchase Can Turn into a $175 Hold on Your Credit Card
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Here's your money briefing for Tuesday, June 28th. I'm J.R. Whelan for The Wall Street Journal. It's bad enough that gas prices are tearing a hole in your household finances, but there's something else going on when you swipe your card to fill up that you might not know about.
When you swipe your card, the gas station and the banks are putting a hold on your card. So for buying $40 in gas, it could temporarily show up as a $175 purchase on your account.
Coming up, we'll talk with Wall Street Journal reporter Ayesha Kalja about why that could be risky for consumers and how they can avoid it. That's after the break.
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If you use a credit or debit card to buy gas, listen up. That $50 you put on your card could actually wind up being a lot more money.
What is the $175 hold on your card and why is it rising at gas stations?
That's because of a triple-digit hold that's put on your card when you swipe. Wall Street Journal reporter Aisha Kalja has been looking into this, and she joins us with more. Hey, Aisha, thank you so much for being with us.
Thank you so much for having me.
So, Aisha, how does this work? When I drive up to the gas pump and I swipe my credit or my debit card, what is the bank and the gas station doing behind the scenes?
So when you swipe your card, the gas station and the banks are putting a hold on your card. It's almost like a security deposit so that they ensure that you have enough money in your account to pay the amount. This is because when you swipe at the moment, the gas station, they don't really know how much gas you're going to buy.
Okay, so a hold being put on a credit or a debit card. This isn't something new, right?
No, it's not. Rental car agencies and hotels often use holds as well. The businesses and banks want to make sure that they're covered in case the final bill is much higher than the initially expected amount. So initially, they're making sure that the gas station actually gets the money.
Okay, but at the gas station, Visa and MasterCard have raised this hold amount from $125 to $175. That seems like a pretty big jump. And you know, that's a lot of money to potentially put somebody on the hook for.
So this is mainly driven by inflation and the rise in the gas prices. A lot of places in the country have seen over $5 a gallon for gas. And because of this, the purchases are much higher. And since the purchases are higher, the limit that is the maximum for the whole has risen as well. And, you know, the activity in people's credit and debit cards has increased as well because of everything is getting more expensive. Groceries, your housing costs, and things like haircuts.
So, you know, Aisha, this is all going on behind the scenes, so the customer may not be aware of this hold being put on their card. But people are using their credit and their debit cards for everything these days, and they're putting a lot of money on their cards. How is this affecting someone's credit card account?
So for the credit cards, the holds will only count against their total available credit line until the transaction is done.
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