What you risk by using debit card at the pump

(AP) -- QUESTION: When I use my debit card to buy gas at the pump, I've noticed that a hold gets put on funds in my account for a few days -- sometimes for more than what I purchased. What gives? Is there any way to avoid this?

ANSWER: Paying for gas right at the pump is a convenience many people have come to enjoy and expect, but what many people don't know is that a hold of up to $75 can be put on your bank account -- even if you bought only $50 worth of gas. And it can take a few days to clear.

To protect merchants from fraud, an authorization is sent to the bank when a debit card is swiped at a self-pay pump. That triggers a hold of funds, which then has to be reconciled with the final purchase amount.

With gas prices now at $4 or more a gallon, it's no longer unheard of to have a full tank cost more than $75, the usual limit for debit card holds. That means some people using debit cards to fill up can get cut off when their bill hits that level. Check out gas prices across the country »

Visa Inc., the largest payment processing network in the country, said last month it would make changes in its systems this fall to allow debit card payments from gas purchases to clear much faster, usually within a few hours. It would also allow merchants to authorize larger amounts, in line with what customers in their market typically pay to fill up.

Consumers Union, a non-profit consumer advocacy organization that publishes Consumer Reports magazine, praised Visa's move and called on gas station owners to take advantage of the faster clearance system and also for MasterCard Inc. to follow suit. Watch how credit cards pinch gas stations »

"People have been complaining about this," said Gail Hillebrand, senior staff attorney with Consumers Union. "Budgets are getting tighter."

MasterCard hasn't yet said whether it would also speed up its own payment clearance system for gas pumps. The company said in response to a query that it "continues to evaluate and develop ways in which our network can be improved for the benefit of consumers, merchants and issuers. This includes, but is not limited to, addressing and minimizing 'hold' periods on debit and credit card transactions."

In the meantime, Hillebrand said, gas buyers can avoid the debit card holds altogether by simply paying inside at the cashier after filling up. If you pay with a debit card and use your personal identification number (PIN), the transaction will clear right away.

For gas stations, taking advantage of Visa's new fast-clearance system for debit cards will require upgrades to their payment processing systems, but it's not yet clear how much it will cost, said Jeff Lenard, spokesman for the National Association of Convenience Stores, a trade group representing gas stations.

"It's something that every retailer will look at to investigate the payoff compared to the cost, but it is not simply a matter of Visa giving a handout," Lenard said.

Paying with a credit card at the pump also can trigger an authorization against your credit line, but that's different from having a hold put on cash in your checking account. A credit card authorization wouldn't affect cardholders unless they were right up against their credit limits.

Similar holds for funds on debit cards can occur if you use one to check into a hotel or pick up a rental car. Avoid these by using a credit card when checking in, Hillebrand said. You can always pay the final bill with your debit card -- just do so with your PIN.

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