Erin
01-10-2003, 10:00 AM
When you use a check card, any check card, and you think the money came out of your account "instantly", it didn't. That is a "hold" or "pre-authorization" or whatever you want to call it. It takes 2-3 days on average for the charge to actually get processed and the money to leave your account. Those holds are a way of making sure you (or someone who stold your card, for that matter) don't spend, say, the same $100 five times before everything goes through. It also allows the merchant to check that a) the card is an active one and b) there is enough $ in your account.
Usually what happens is this: the hold goes on the account right away, generally for the same amount as the purchase amount (see exceptions below), and when everything is processed a couple of days later, the bank puts the final charge on and removes the hold at the same time. So to you it seems "instant" since your balance was immediately updated to the correct amount and never changed after that. *except* that if you look at the date, it will show the date it was finalized, not the date on which you made the purcase. That doesn't make it a double charge; the initial hold from the day of the purchase falls off (usually the bank's system will remove it at the same time as the final charge goes through).
EXCEPTION ONE: (Most?) restaurants' systems automatically add on 15% or 20% to whatever the bill was for the hold, and then later when it is finalized the right amount goes through. This is why: when you give your cc to the waitress, she doesn't kow how much tip you are going to add. She goes and swipes the card and enters the amount from the bill, and the system automatically adds a certain percentage to that when it runs that authorization, to make sure that you have enough in your account to cover the tip. Then she brings the card to you to sign and you write down the amount you want to leave as a tip. When the charge is processed it will go through as the amount you wrote down, and the hold will fall off the account. If the waitress is inexperienced or just was never taught that in training she may have no clue that the system adds that extra in when it does the authorization.
EXCEPTION TWO:Here's the deal with pay-at-the-pump. They don't want to give you gas before they are sure it is a valid card that you're using, but on the other hand they don't know how much to charge you until you already have the gas. So most gas stations will authorize $1 just to be sure it is a "good" card, and if that goes through they let you get the gas and a couple of days later the true amount replaces the $1 hold. If you want to avoid that, just pay inside instead of at the pump.
EXCEPTION THREE: Please do not use your check card for a car rental. They will do an authorization for like $200 and then when you return the car they will run a seperate transaction for the correct amount. How long it takes for the $200 hold to "fall off" your account depends on the bank, but if you call and (nicely!) explain the situation, and the rep sees the "real" charge so they know the first one was just a hold - or if you have someone from the rental place call - they can probably remove it for you. Or, just use a credit card. They work the same way except that the holds don't tie up money in your checking account :eek: they just tie up part of your credit limit.
EXCEPTION FOUR: Oops! The cashier at Target had to cancel an incorrect amount and re-ring your entire purchase. If they ran a purchase, then ran a return, and then a second purchase for the same amount, for a couple of days you will have holds for both the incorrect amount and the correct amount on your account. Later you will see two charges and a credit and it will all work out. Or, if they cancelled the return, you will have both holds for a while; the correct one will be processed as usual and the incorrect one will just never be processed and will fall off whenever the bank's policy dictates (3 business days for the bank at which I worked). Now, the bank has no way of knowing that that carge was "cancelled" at the store; from the bank's point of view it is just never processed so they go ahead and let the hold fall off, figuring it most likely never will get processed.
TIP: If you have a problem and can't get the hold taken off (say for a double charge or somethng) try to go through the merchant and have them call the bank with the situation and the authorization code (usually a 5-6 digit number). The bank may be able to remove it for them even though they wouldn't for you. In this case it's best to talk to the store or restaurant manager rather than the teenager behind the counter since the average minimum-wage-earning 16-year-old will have no clue what you're talking about. You will probably be fine talking to the regular bank Customer Service Rep who answers your call though since they hear this stuff several times a day (more than their supervisors do!).
Can you tell I spent a year in customer service for a bank? ;) HTH some. Jessica, for your situation, I have no clue why they put a hold on for $75, it sounds ridiculous to me unless there is more I'm not understanding.
P.S.: Jessica, if it was your checking account in this situation, you wouldn't bounce any checks (I'm assuming that when it is processed it will be for the correct amount). Even though, when you ask your balance, those holds are reflected in your balance, the money isn't "really" gone, so you won't bounce anything. Example: I have $100 in my account on Monday. I do a check card purchase for $75 at Target and then I write out a couple of checks, one for $20 and one for $50. The checks clear on, say, Tuesday. At that time I am not overdrawn and could even still deposit money to avoid an insufficient funds fee. Then on Wednesday my check card purchase goes through. *Now* I am overdrawn and getting a $30 fee. But, if for some reason the *hold* was just for $75 and when the charge really goes through it is for only $10, I am not overdrawn at any time and I don't get a fee at all.
Usually what happens is this: the hold goes on the account right away, generally for the same amount as the purchase amount (see exceptions below), and when everything is processed a couple of days later, the bank puts the final charge on and removes the hold at the same time. So to you it seems "instant" since your balance was immediately updated to the correct amount and never changed after that. *except* that if you look at the date, it will show the date it was finalized, not the date on which you made the purcase. That doesn't make it a double charge; the initial hold from the day of the purchase falls off (usually the bank's system will remove it at the same time as the final charge goes through).
EXCEPTION ONE: (Most?) restaurants' systems automatically add on 15% or 20% to whatever the bill was for the hold, and then later when it is finalized the right amount goes through. This is why: when you give your cc to the waitress, she doesn't kow how much tip you are going to add. She goes and swipes the card and enters the amount from the bill, and the system automatically adds a certain percentage to that when it runs that authorization, to make sure that you have enough in your account to cover the tip. Then she brings the card to you to sign and you write down the amount you want to leave as a tip. When the charge is processed it will go through as the amount you wrote down, and the hold will fall off the account. If the waitress is inexperienced or just was never taught that in training she may have no clue that the system adds that extra in when it does the authorization.
EXCEPTION TWO:Here's the deal with pay-at-the-pump. They don't want to give you gas before they are sure it is a valid card that you're using, but on the other hand they don't know how much to charge you until you already have the gas. So most gas stations will authorize $1 just to be sure it is a "good" card, and if that goes through they let you get the gas and a couple of days later the true amount replaces the $1 hold. If you want to avoid that, just pay inside instead of at the pump.
EXCEPTION THREE: Please do not use your check card for a car rental. They will do an authorization for like $200 and then when you return the car they will run a seperate transaction for the correct amount. How long it takes for the $200 hold to "fall off" your account depends on the bank, but if you call and (nicely!) explain the situation, and the rep sees the "real" charge so they know the first one was just a hold - or if you have someone from the rental place call - they can probably remove it for you. Or, just use a credit card. They work the same way except that the holds don't tie up money in your checking account :eek: they just tie up part of your credit limit.
EXCEPTION FOUR: Oops! The cashier at Target had to cancel an incorrect amount and re-ring your entire purchase. If they ran a purchase, then ran a return, and then a second purchase for the same amount, for a couple of days you will have holds for both the incorrect amount and the correct amount on your account. Later you will see two charges and a credit and it will all work out. Or, if they cancelled the return, you will have both holds for a while; the correct one will be processed as usual and the incorrect one will just never be processed and will fall off whenever the bank's policy dictates (3 business days for the bank at which I worked). Now, the bank has no way of knowing that that carge was "cancelled" at the store; from the bank's point of view it is just never processed so they go ahead and let the hold fall off, figuring it most likely never will get processed.
TIP: If you have a problem and can't get the hold taken off (say for a double charge or somethng) try to go through the merchant and have them call the bank with the situation and the authorization code (usually a 5-6 digit number). The bank may be able to remove it for them even though they wouldn't for you. In this case it's best to talk to the store or restaurant manager rather than the teenager behind the counter since the average minimum-wage-earning 16-year-old will have no clue what you're talking about. You will probably be fine talking to the regular bank Customer Service Rep who answers your call though since they hear this stuff several times a day (more than their supervisors do!).
Can you tell I spent a year in customer service for a bank? ;) HTH some. Jessica, for your situation, I have no clue why they put a hold on for $75, it sounds ridiculous to me unless there is more I'm not understanding.
P.S.: Jessica, if it was your checking account in this situation, you wouldn't bounce any checks (I'm assuming that when it is processed it will be for the correct amount). Even though, when you ask your balance, those holds are reflected in your balance, the money isn't "really" gone, so you won't bounce anything. Example: I have $100 in my account on Monday. I do a check card purchase for $75 at Target and then I write out a couple of checks, one for $20 and one for $50. The checks clear on, say, Tuesday. At that time I am not overdrawn and could even still deposit money to avoid an insufficient funds fee. Then on Wednesday my check card purchase goes through. *Now* I am overdrawn and getting a $30 fee. But, if for some reason the *hold* was just for $75 and when the charge really goes through it is for only $10, I am not overdrawn at any time and I don't get a fee at all.