High gas prices mean stations “hold” more of your money when you pay with plastic

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Low bank account balances and high credit usage can mean trouble

Gassing up the car for a Fourth of July road trip? Make sure you have plenty of money in your bank account or an ample credit limit.

It’s not just the cost of the fuel you have to worry about. When you use a credit or debit card at the gas pump, the gas station takes temporary possession of enough of your money or credit to cover even more than your purchase and holds it until the purchase settles.

With the price of gasoline and diesel fuel at record highs, The Wall Street Journal reports those “holds” can amount to $175. While most of the time the money is returned in a couple of hours, there are cases where it can take longer.

Visa and Mastercard began allowing the larger holds earlier this year when gas prices surged. At $5 a gallon, filling up a truck or SUV can cost over $100.

When gas prices were $3 a gallon or less, the holds were much smaller. Now that the price is over $5 a gallon in several states, the larger hold on a debit card purchase could mean trouble if the consumer has $100 or less in their bank account.

“When you set a hold that is a high number, it increases the likelihood that a consumer will overdraft because of that hold,” Jeff Lenard, vice president of strategic industry initiatives at the Association for Convenience & Fuel Retailing, a trade organization, told the Journal. “However, if you set a number that’s too low, you also risk not getting paid for that transaction.” 

What to do

For consumers buying gas with a credit card — especially one with a low credit limit — there is a similar risk. A $50 gas purchase using a card with only $125 in credit limit remaining might seem safe, but it isn’t. The $175 hold, even for a couple of hours, will result in an overdraft charge.

Before you head out on a holiday trip that will require a refueling stop, it’s a good idea to check your bank balance if you’re paying with a debit card. By logging into your credit card account, you can make sure you have enough credit to cover the hold.

If you think you’re dangerously close to the edge, carrying plenty of cash to pay for fuel could offer some peace of mind.

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