Sticker shock at the gas pump isn’t the only surprise consumers face when filling up. If you’re using a credit or debit card for payment, you may be shocked to learn there’s a pre-authorization amount placed on your credit or debit card. It’s a common practice among gas stations, but one that’s not well known among many consumers. With gas prices soaring, the pre-authorization hold could temporarily limit your purchasing power or result in overdraft fees depending on how much you fill up.
Why do gas stations do it?
The pre-authorization hold is designed to protect the gas station from fraud. The merchant doesn’t know how much gas you’re getting and wants to ensure there’s enough credit to cover it. It’s up to the gas station’s discretion to set the hold amount.
How does the hold work?
You pull up to the gas pump and swipe your payment card. A request for a predetermined amount, which may be more than the purchase amount, is sent to the credit card issuer. The pre-authorization hold can range from as little as $1 to more than $100. In some instances, the amount of the hold is displayed on the payment terminal.
A gas station could place a $50 hold when authorizing your card purchase for $20 worth of gas. With gas prices up 46 percent in the past year, the hold may be even higher. Gas stations want to make it as easy as possible for you to get gas. If they set the hold too low, you may have to engage in more than one transaction to fill up, which could lead to frustration. “They put a hold on your card to allow you to pump up to that amount because they don’t have the transaction amount,” says Patrick De Haan, head of petroleum analysis at GasBuddy. “It’s more of an inconvenience to have to run two different transactions.”
See more Shopping & Groceries offers >
It’s important to note that while gas stations set the pre-authorization amount, the card issuers determine how long the hold stays on your account. The hold can last up to 72 hours.
Why can it be problematic?
The pre-authorization is no big deal if you have enough credit on your credit card or cash in the bank. It becomes a problem when it temporarily limits your purchasing power or puts you in arrears.
FAQs
The temporary hold is meant to protect the merchant in case the charge doesn't go through. When a card is swiped at the gas pump, the card issuer is sent a request for a predetermined amount that may be more than the purchase amount. The amount is set by merchants and can be as little as $1 and up to $175.
Why do gas stations pre authorize so much? ›
Answer. Fuel stations commonly place a pre-authorization hold on the card to ensure that there are enough funds available in the account to cover the cost of the fuel being purchased. The amount of the hold can vary depending on the gas station's policies, but $500 is a common pre-authorization amount at some stations.
How to avoid gas station holds? ›
Of course, you could always use a different payment method, like a credit card, or cash, when paying for gas. While holds are generally placed on both debit and credit cards, you may see a lesser hold (and sometimes no hold at all) when using a credit card.
How much of a hold do gas stations put on your card? ›
Why do some gas stations put a hold on my credit card? They want to be sure the credit card (or Debit Card) is real and has enough funds to pay for the gas. Most put a $100 Default hold on.
Is it legal for gas stations to put a hold on your card? ›
It's known as a “pre-authorization hold.” It's perfectly legal, and many gas stations do it these days to make sure you have enough money on your debit card to pay for your fill up.
How long does a gas station pre-authorization last? ›
The $50 hold will remain until the transaction clears, which can take 48-72 hours. In these transactions, gas stations determine the amount of the hold and card issuers determine its length. Gas stations, however, do not keep the difference between the hold amount and the amount purchased.
How much is a gas station pre-authorization charge? ›
As such, the gas station owners want to make sure they will get paid. That's why they will put a preauthorization hold on credit and debit card payments at the pump. The exact amount may vary from station to station, but it's generally anywhere from $1 up to $100.
Why did the gas station charge me $100 on my credit card? ›
The $100 hold ensures that there are enough funds on your card to pay for gas. When you're finished pumping, the station will charge you for the actual purchase amount, and the $100 gas hold will be released once the transaction is completed, which can take several days.
Why did the gas station charge me $150? ›
Pre-authorization charges are a common practice when a vendor (a gas station, a hotel, or a rental car agency) doesn't know exactly how much of their service you're going to pay for. The hold ensures that the vendor will get appropriately paid after you're done, but this can put consumers in a tough spot.
What is the $100 hold at the gas station? ›
Since pumping gas is an open-end purchase, gas stations will typically pre-authorize your payment card for a larger amount to ensure that your card has enough funds to cover the amount of gas you'll leave with. This pre-authorization is typically $100.
Gas stations often operate with a low profit margin on gasoline sales according to multiple sources including BestCards and Chase Bank, so the additional fees on gasoline purchases made with cards act to mitigate the processing fees that retailers pay.
What happens if you prepay too much for gas with a credit card? ›
If you prepay too much for gas with a credit card, you will only be charged for the purchase amount and the remainder of the prepaid amount will not be charged to your card. The gas pump will stop when you reach the prepaid amount or when the tank is full.
How do I remove the hold on my credit card? ›
Ask for the hold to be removed immediately after paying your bill. Contact your credit card issuer to ask that the hold be removed once you've paid your final bill from the merchant.
Why are gas stations holding so much money? ›
The pre-authorization hold is designed to protect the gas station from fraud. The merchant doesn't know how much gas you're getting and wants to ensure there's enough credit to cover it.
What is a pre-authorization charge? ›
A preauthorization charge is a temporary hold on a specific amount of the available balance on a credit or debit card. This charge checks that the card is valid and has sufficient funds to cover the transaction. The amount is set aside by the card issuer but not actually transferred to the business.
How long does a gas station hold stay on your account? ›
Paying at Gas Stations
The cost of your gas will be charged later as a separate transaction that releases the authorization hold. This temporary charge should correct to the actual amount or fall off within 5 days. To avoid this issue, pay for the amount of gas you'd like at the register before you pump.
Why did the gas station charge me $100 credit card? ›
The $100 hold ensures that there are enough funds on your card to pay for gas. When you're finished pumping, the station will charge you for the actual purchase amount, and the $100 gas hold will be released once the transaction is completed, which can take several days.
Why did the gas station charge me $125? ›
Many gas stations have a $125 limit for Visa transactions at the pump because larger transactions trigger higher fees for certain cards, as well as additional liability in the event of fraud.
Is pre authorized payment good? ›
Pre-authorized debits (PADs) are a convenient way to pay bills and make other payments automatically. Instead of sending a payment, a company withdraws funds from your bank account. It's a great way to pay bills like your mortgage, utilities, donations and insurance premiums.
