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October 2008
VIEWPOINT THE CONSUMERS UNION PERSPECTIVE
As if gas didn't cost enough...
Mary Alice Belov planned to put gas in her car, then buy groceries. What she didn’t plan on was the $10 gas purchase freezing
$50 of her bank account and forcing Belov, a small-business owner from Goldendale, Wash., to put items from her cart back
on the shelf. Blame the all too common "debit hold."
Banks may put a hold on an account when they’ve given the green light to use the card for a purchase whose final amount is unknown. That’s exactly what happens thousands of times a day at gas pumps across the country. You swipe your debit card, the gas station asks your bank for approval, and along with saying yes, the bank may freeze up to $75 of your money for several days, no matter how little gas you buy. That debit hold can put you into the red if you don’t keep much money in your account.
What Consumers Union is doing
Visa and MasterCard, which brand many of the debit cards in the U.S., set rules that determine how long the bank can tie up
your money. Consumers Union and other groups have received numerous complaints from consumers about long debit holds.
We’ve urged Visa over the last few years to end this anticonsumer policy, and now there’s some good news: Visa has announced that starting in October it will offer gas stations a "real-time clearing" process. It will reduce the chances that a gas purchase at the pump will cause a debit hold on an account for more than 2 hours, far less than the three business days now permitted.
For the policy to affect consumers, gas stations and the companies that process transactions will have to adopt Visa’s new system. Hess says its company-owned stations plan to adopt the policy; the other major oil companies that we queried about their debit hold policies did not return our calls.
MasterCard is also making some changes. It says it will require banks to release debit holds for purchases at the pump within 24 hours or the next business day, beginning next summer. Those changes will help ensure that you don’t take a bigger hit at the pump than you need to.
Here, a monthly perspective from Consumers Union on the latest challenges—and possible solutions—facing U.S. consumers today.
See archived letters.
As if gas didn't cost enough...
ONE EXPENSIVE FILL-UP
Mary Alice Belov bought $10 worth of gas. It cost her a lot more in angst.
Photo by Jerome HartMary Alice Belov bought $10 worth of gas. It cost her a lot more in angst.
Banks may put a hold on an account when they’ve given the green light to use the card for a purchase whose final amount is unknown. That’s exactly what happens thousands of times a day at gas pumps across the country. You swipe your debit card, the gas station asks your bank for approval, and along with saying yes, the bank may freeze up to $75 of your money for several days, no matter how little gas you buy. That debit hold can put you into the red if you don’t keep much money in your account.
What Consumers Union is doing
What you can do
If you bank online, track debit holds so that you know how much of your account is tied up.
If you use a Visa debit card, ask your gas station if and when it is switching to real-time clearing.
Avoid holds altogether by paying inside with your debit card using your PIN or by paying cash.
We’ve urged Visa over the last few years to end this anticonsumer policy, and now there’s some good news: Visa has announced that starting in October it will offer gas stations a "real-time clearing" process. It will reduce the chances that a gas purchase at the pump will cause a debit hold on an account for more than 2 hours, far less than the three business days now permitted.
For the policy to affect consumers, gas stations and the companies that process transactions will have to adopt Visa’s new system. Hess says its company-owned stations plan to adopt the policy; the other major oil companies that we queried about their debit hold policies did not return our calls.
MasterCard is also making some changes. It says it will require banks to release debit holds for purchases at the pump within 24 hours or the next business day, beginning next summer. Those changes will help ensure that you don’t take a bigger hit at the pump than you need to.
Posted: September 2008 — Consumer Reports Magazine issue: October 2008
