Many members have questions about “holds” that are applied to their checking account when they use their debit card as “credit.” Holds can be confusing and can cause overdraft fees if you don’t understand how they work.
Why do I get a hold on my account?
There are two types of debit card transactions. A debit transaction is when you enter your PIN and the money is deducted from your account immediately. A credit transaction is when you sign for the purchase and the money is put on “hold” and shown deducted from the available balance. The purchase amount is reserved, but is not deducted from the account balance until the transaction clears, generally in one to three business days.
Holding the transaction until it clears will cause your account to show an actual balance and a lesser amount called the “available” balance, which reflects the hold. Purchases without holds work the same as transactions with holds. They are generally debited in one to three business days although no funds will be set aside.
Most vendors request a hold that matches the purchase amount. However, some vendors request a hold amount that is different than the transaction. Here are some examples:
- Shopping. Retail stores request a hold for just the transaction amount. The money will be deducted within three business days.
- Gas stations. No holds currently are requested for gas purchases and the amount pumped will be subtracted from the account within three business days.
- Restaurants. Typically a restaurant hold will include a tip amount of 10, 15 or 20 percent of the purchase amount. The amount that clears will include the purchase and the amount you actually tipped if you included the tip on your card.
Then why should I use my card as “credit” instead of “debit”?
You can earn Extra Award Points that are good for cash, merchandise, travel packages or gift certificates. Also, the cardholder is more protected when transactions are processed as credit.
How should I keep track of holds?
The best way to know the balance of your account is to keep a register of transactions. Recording deductions eliminates confusion and the need for overdraft. You should balance your account when you receive monthly statements to identify possible mistakes.
How can I monitor the holds on my checking account?
Details of holds on your account can be viewed through online banking. Go to the Accounts Summary page and click on the “available balance” in orange for your share draft account. The hold amounts will appear in an orange bar listing the date, the merchants and the holds. If the available balance is not in orange, there is no hold.
Family Trust welcomes questions. Use our online Secure Chat, call (803) 367-4100 or visit any office.