If you watch your running bank or credit card balances closely, you’ve probably noticed ghostly charges that appear and disappear within a day or two. It’s not always obvious where they come from, but they’re usually small — just a few dollars — and they never show up on your official monthly statements.
So, like ghosts, you pretend they don’t exist. Failing that, you try not to let them bother you.
But you should at least acknowledge these temporary charges’ existence and understand why they happen. Because while they don’t interfere with your finances most of the time, they — like even friendly ghosts, I guess — have the potential to cause real-world hassles.
Two Types of Payment Card Holds: Administrative Holds vs. Authorization Holds
These charges are known as authorization holds, or sometimes pre-authorization holds. Ghost jokes aside, you can usually suss out their origins by studying your statement and thinking about where you recently spent money. The most common culprits are fueling stations, hotels, and rental car companies.
Authorization holds are not to be confused with administrative holds, which are distinct actions taken by credit card issuers against over-limit or delinquent credit card accounts.
We’re primarily concerned with authorization holds here. They’re more fun anyway, or at least not actively bad in the way administrative holds can be. But as a credit card user, you do need to understand how administrative holds work, why they happen, and how they differ from authorization holds.
So let’s take a quick detour.
An administrative hold is imposed by the card issuer when there’s a problem with your account. It’s open-ended, potentially dragging on for weeks or even months until you fix the problem with your account. If you can’t do that, the issuer may close your account.
An administrative hold can occur in two situations:
- You Exceed Your Credit Limit. This is known as an over-the-limit hold. It happens when you make a credit card transaction that pushes your balance over your allowed credit limit. It lasts until you pay your balance down below that limit.
- You Develop a Pattern of Late Payments. One late payment might not trigger an administrative hold, but two or more probably will. In this scenario, the issuer freezes your account until you’ve made several on-time payments.
An authorization hold is that “ghost charge” imposed by an individual merchant when it’s not yet known how much you’ll actually spend with them.
An authorization hold usually lasts a few days at most, during which you can still use your card, albeit with your credit limit reduced by the hold amount. Afterward, the hold disappears from your account or turns into a “real” transaction for a different, more precise amount.
The following sections explain authorization holds in more detail. If you still have questions about how they compare to administrative holds, refer to the chart below.
|Administrative Hold||Authorization Holds|
|Affect credit cards only, not debit cards||Can affect credit and debit cards|
|Imposed by the card issuer||Imposed by the merchant|
|Occur when you exceed your credit limit or miss a payment||Occur when the merchant doesn’t know the final transaction amount for whatever reason|
|May restrict use of your card||Can still use your card if you’re not over your credit limit|
|Can last indefinitely||Typically last a few business days at most|
|Can result in account closure||Can’t directly cause account closure, but can prompt an administrative hold if it pushes you over your credit limit|
Examples of Credit Card Authorization Holds
Merchants impose authorization holds for a variety of everyday transactions. The common thread in all these situations is that the exact final payment amount isn’t known to the merchant when you present your card:
- Fuel Purchases at the Pump. Gas and EV charging stations often put holds on customer credit cards until the full purchase amount goes through. Fuel holds are typically small, sometimes as low as $1. Once the transaction processes, they’re replaced by the actual, potentially much larger amount.
- Checking Into a Hotel or Resort. Hotels and resorts put larger holds on customer credit cards to cover room charges, incidental expenses, and damage or cleanup fees. They apply even if you prepay for the room, which is why you can expect to be asked for a credit card at check-in. Hotel and resort holds are much larger than fuel holds — often $200 or $300 — but disappear if you don’t charge anything to the room or raid the minibar.
- Picking Up a Rental Car. Like hotels, rental car companies operate on the “better safe than sorry” principle. Their authorization holds cover above-and-beyond vehicle damage and cleaning costs, road tolls, and fuel-up costs if you didn’t prepay for fuel and forgot to fill up before returning the vehicle. Rental car holds typically run a few hundred dollars, and like hotel holds, they disappear once the merchant confirms they’re not needed.
- Checking Into Certain Entertainment Venues. Some entertainment venues, like food halls and arcades, link your credit card to special payment cards that can only be used on the property. You swipe or tap the special card to pay for stuff while you’re there, but your actual bill isn’t calculated until later. In the meantime, the merchant puts a small hold on the credit card you provided. As with fuel purchases, this hold can be much smaller than the final transaction amount.
How Pre-Authorization Charges Work
Temporary though they might be, authorization holds can mess with your purchasing power. Good thing they’re easy enough to understand.
Can You Have an Authorization Hold on a Debit Card?
Yes, you can have an authorization hold on a debit card. There are two different types of debit card authorization holds.
First, if the debit card is part of a credit card network like Visa or Mastercard, the merchant can put a hold on it as if it were a regular credit card not directly connected to a bank account. They’ll need to run the transaction as a credit transaction, no PIN entry needed. You’ll see the ghost charge in your bank account, but it won’t appear to reduce your cash balance.
Debit card holds for PIN transactions aren’t as common, but they can happen when you use your debit card to pay for fuel at the pump. The hold appears as an actual debit on your bank account statement. So you’re not overcharged, the hold amount is subtracted from the total transaction amount once it goes through.
How Long Do Pre-Authorization Holds Last?
From your perspective as the cardholder, an authorization hold should disappear once the underlying transaction processes. Depending on the credit card network, the merchant, the day of the week, and possibly other factors, it could last anywhere from 1 to 3 business days or up to 5 calendar days.
Behind the scenes, the merchant retains the ability to charge you for much longer — up to 30 days, depending on the credit card network. This is useful for transactions that won’t settle for many days after the merchant first sees your card, like long resort stays or car rentals.
This discrepancy explains why you’ll occasionally see a hold on your account even after the actual transaction processes. While confusing, this is basically a glitch, and it doesn’t mean you’ll be charged again.
How Much Are Pre-Authorization Holds?
It depends on the merchant and what you’re buying.
Fuel holds at gas stations and EV charging locations tend to be lower. They’re often just a token amount, like $1 to $5. More cautious fuel merchants might hold $50 or $75.
Authorization holds for hotel stays and car rentals tend to be higher. $200 to $300 is the standard range; I can’t recall anything higher than $250 in my own experience. But that’s enough to crimp your purchasing power if your credit limit is low or you’re close to maxing out your card.
How Do Authorization Holds Affect Your Credit Limit or Bank Balance?
The biggest problem with authorization holds is their effect on your spending power. A credit card hold reduces your credit limit, while a debit card hold reduces your available bank account balance.
In both cases, the limit or balance is reduced by the amount of the hold. So if your credit limit is $1,000 as you walk up to the rental car counter, it’ll be $750 after Avis slaps a $250 hold on it. If you’re renting from a company that accepts debit card deposits, that $250 hold knocks your $1,000 bank account balance down to $750.
Your credit limit or available bank balance remain diminished until the hold disappears. If you prepaid for your hotel or car reservation, the hold’s disappearance sends your limit or balance back to pre-hold levels, less any charges or debits you’ve made in the meantime.
If you didn’t prepay, you’ll probably see a second pending charge or debit alongside the hold. Unlike the hold, that transaction will stick.
Do Authorization Holds Show Up on Your Credit Card Statement?
When an authorization hold hits your credit card account on your statement closing date, you might wonder whether it’ll show up on your official statement and increase your monthly payment.
It shouldn’t. Though it reduces your credit limit, a hold isn’t an actual transaction, so it wouldn’t be fair for the issuer to bill you for it. If the hold does show up as a transaction on your next statement, the statement after that should show a corresponding credit to your balance (reducing the amount you owe). If that doesn’t happen, contact your credit card issuer and ask them to adjust your account.
Tips to Manage & Avoid Authorization Holds
It’s difficult to avoid them completely, but you can reduce authorization holds’ impact on your credit limit and purchasing power by doing the following:
Make Sure You Have Breathing Room
This is most important before you travel, when you’re most likely to encounter multiple larger holds at the same time.
Log into your credit card account and verify that you have enough breathing room between your current account balance and your credit limit. The gap should be big enough to cover all expected holds — so one for each hotel and rental car you expect to reserve during your trip, plus one for each fuel-up.
If you’re using the same card for walking-around money on your vacation, make sure the credit limit can accommodate all the restaurant meals, souvenirs, tours and so forth you’re planning to spend on.
Clarify the Hold Amount and Timeframe in Advance
This gives you a better sense of just how much breathing room you need. You can guesstimate — say, $250 per hotel and car — but that doesn’t allow for surprisingly large holds or for multiple holds by the same merchant (which can happen if, say, you rent a boat from the beach resort you’re staying at). A quick phone call to each merchant should do it.
Use the Same Card for Reservations and Holds
At the check-in desk, present the same credit card or credit-enabled debit card you provided when you booked your hotel or rental car. Do this even if you didn’t prepay for your reservation so you’re not juggling multiple cards with holds and large pending charges when you’re trying to have a good time.
Carry a Second Card When You Travel
Bring a second, unencumbered credit card on your trip and use it for all the other spending you plan to do. This counterbalances the temporarily reduced spending power on your “hold card” and ensures you don’t hit your credit limit at the least convenient time.
You don’t have to limit yourself to two credit cards on the road, by the way. If you have a third, bring it as well. When I travel, I use a travel credit card for bookings, a dining credit card for restaurant meals, and a flat-rate cash-back credit card for everything else.
“Pay Inside” for Fuel
When you fuel up your vehicle, pay at the register if possible (rather than at the pump) and tell the attendant to authorize your card for a specific amount (say, $30). You might not fill up all the way, but because the merchant knows exactly what you’re paying, they won’t hit you with an authorization hold.
Pay for Fuel With Cash
You can also use old-fashioned cash to pay for fuel. This has the same practical effect as authorizing a specific card charge amount before you fill up, and it could earn you a small cash discount (typically 3% to 5% of the transaction amount).
Pre-Authorization Holds vs. Pre-Authorized Charges
You probably pay at least some of your bills on a recurring, automated payment plan. On a set date every month, quarter, or year, the merchant deducts the bill amount from your bank account balance or credit card spending limit. These are commonly known as pre-authorized charges or pre-authorized debits.
Log into your online credit card or bank account dashboard and you can often see these charges pending a day or two before they’re scheduled. Which prompts the question: Are pre-authorized charges the same as authorization holds?
The short answer is no, they’re not the same thing. While superficially similar, they have some technical differences that can actually matter to you, the person being charged.
|Authorization Holds||Pre-Authorized Charges/Debits|
|One-off, occuring only when you initiate an eligible transaction with the merchant||Recurring on a set schedule (usually monthly) based on the merchant’s billing cycle|
|Remain visible in your account for a few days||Show as “pending” for 1 to 2 days before the scheduled debit date|
|Reduce your credit limit while visible, but not after||Don’t reduce your credit limit until the scheduled debit date|
|Disappear with no actual charge OR replaced by a “real” transaction||Become a “real” transaction on the scheduled debit date|
|Don’t add to your account balance or show up on your billing statement||Do add to your balance and show up on your billing statement|
|Generally can’t be canceled until the “real” transaction goes through||Can be canceled by the customer (though merchant policies and timing may vary)|
|Can put you over your credit limit||Can put you over your credit limit|
The vast majority of payment card authorization holds happen after just a handful of transaction types.
Unfortunately, those transaction types are common: car rentals, hotel reservations, and especially gas and EV charging. So it’s in your best interest as a consumer to understand how they work, how they affect your credit limit and bank account balance, and how to reduce their impact on your life.
In addition to proactive measures like confirming hold amounts in advance and making sure you have a second (or third) card when you travel, there’s one more thing you can do to keep authorization holds from putting you over your credit limit: requesting a credit limit increase. If it’s been a while since you’ve tried and your income or credit score (or both) have increased in the meantime, you might be surprised what a simple conversation with your issuer could do for your spending power.