If you’ve ever seen a recent charge on your credit card account and wondered why it was so high—or there at all!—you might have been looking at a credit card hold—also known as authorization hold. This type of charge temporarily reduces your available credit, even if you haven’t made an actual purchase yet. While holds are a common part of using a credit card, they don’t have to be a major inconvenience. Just don’t let it catch you off guard!
Understanding how credit card holds work can help you avoid any potential pitfalls. Keep reading to find out what “hold” on a credit card means—and to get some useful tips.
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What is a temporary hold on a credit card?
A credit card hold is a temporary freeze on a portion of your available credit, which is the amount of credit you can use. This hold usually occurs when you authorize a transaction but the merchant hasn’t completed the process yet.
There are two common types of hold on credit cards. First: pre-authorization holds, common with gas stations, hotels, and rental car companies. They temporarily reduce your available credit until the final charge is processed. These holds are often larger than the final charge and are adjusted once the service is completed.
For example, if you check into a hotel or rent a car, the company may place a hold on your card for the estimated amount of the total bill. This ensures that you have enough available credit to cover the expenses.
Second, there are the merchant holds: Some retailers might place a hold on your card when you make a purchase to ensure funds are available before the transaction is completed, usually within a few days.
So, what does a hold on your credit mean? During this time, the amount of the hold is subtracted from your available credit but hasn’t been charged to your account. The actual charge will be processed later, usually after the service has been rendered or the final amount is known.
How long does a hold last on a credit card?
The duration of a credit card hold can vary depending on the type of hold and the merchant. Generally, holds can last anywhere from a few hours to several days.
Time frames typically vary by merchant:
- Hotels and rental cars: Holds typically last until you check out or return the vehicle, plus a few additional days for processing. This can range from 24 hours to a week.
- Gas stations: A hold can last from a few minutes to a couple of days, depending on how quickly the transaction is processed.
- Restaurants and other merchants: How long do they put a hold on your card? Generally until the final bill is settled, which is usually within 48 hours.
If there’s a delay or discrepancy, the hold may linger longer than expected. But in most cases, the hold is automatically removed and replaced with the actual amount once the final transaction is processed.
How do I remove a hold on my credit card?
If you find that a credit card hold is lasting longer than expected or you are wondering how to remove a hold on a credit card because you need the held amount released sooner, you can take the following steps:
- Reach out to the merchant that placed the hold: Explain the situation and request that they release the hold as soon as possible. Sometimes, a simple call can expedite the process.
- Contact your credit card issuer: Especially if the merchant is unresponsive or the hold persists beyond a reasonable time. They may be able to assist in resolving the issue.
- Provide with the necessary documentation: If the hold is related to a rental or service that’s been completed, providing proof like a receipt or final bill can help speed up the process.
- Wait it out: How do I release a credit hold? In some cases, you may simply need to wait for the hold to expire naturally. Keep checking your account to ensure the hold is eventually removed.
How to avoid credit card holds
Credit card holds can be inconvenient, but with a few proactive actions, you can minimize their impact:
Use a different payment method
Consider using a debit card, where the funds are drawn directly from your bank account, so holds are often smaller or non-existent.
For transactions like hotel stays, rental cars, or restaurant bills, paying with cash can completely bypass the hold process. Many establishments accept cash deposits in place of credit holds, which can be returned upon the completion of your stay or service.
Also, prepaid cards—similar to debit cards but with a predetermined balance—can be a good option if you want to control spending and avoid potential holds on your primary credit card.
Ask about hold policies
Before committing to a transaction like making a reservation or booking a service, ask the merchant about their hold policies. Knowing the amount and duration of the hold can help you plan accordingly.
For example, ask, “How much will you hold on my card, and when will it be released?” If possible, ask the merchant to provide the hold policy in writing. This can be especially helpful if there’s a discrepancy later on. Having documentation ensures you have proof of what was agreed upon.
In some cases, you might be able to negotiate a smaller hold, especially if the standard hold is larger than the expected final charge. If the hold policy seems unreasonable or inconvenient, you might want to consider alternative options.
Monitor your account
Regularly check your credit card account to track holds and ensure they’re removed promptly after the transaction is finalized.
Most credit card issuers offer account alerts via email, text, or app notifications. Set up alerts for any pending transactions, including holds, so you can stay informed in real-time.
If you notice a hold that has not been released after the final transaction, don't hesitate to follow up with both the merchant and your credit card issuer. The sooner you address the issue, the faster it can be resolved.
Bonus tip: Keep an emergency fund
A credit card hold can significantly reduce your available credit, which can be a problem if you rely on that credit for emergencies or everyday expenses. Having a backup plan, such as an emergency fund, can help you avoid financial stress.
Aim to set aside three to six months' worth of living expenses in an easily accessible savings account. This fund can cover unexpected expenses, like car repairs or medical bills, without relying on your credit card.
Knowing you have an emergency fund in place can reduce financial stress if a credit card hold temporarily limits your spending power.
FAQs
Does a credit card hold affect credit score?
No, a credit card hold does not directly affect your credit score. Holds are not reported to credit bureaus because they are not actual charges. However, a hold can temporarily reduce your available credit, which may impact your credit utilization ratio (the percentage of your available credit that you're currently using, calculated by dividing your total credit card balances by your total credit limits).
If your credit utilization ratio is significantly increased due to a hold, it could potentially affect your credit score until the hold is removed.
Can a hold exceed your credit limit?
In most cases, no. Credit card issuers typically prevent holds from exceeding your credit limit. However, it’s important to make sure you have enough available credit to cover both the hold and any other charges you may need to make.
To know how much the hold is, you can ask the merchant directly before making a reservation or booking a service. They can provide the exact amount of the hold and how long it will last.
Another option is to check your account for pending transactions after the hold is placed. The hold amount will usually appear under pending charges in your credit card account.
Lastly, review the terms and conditions of the service, as some businesses may disclose their hold policies in their booking agreements or FAQs.
What happens if a hold isn’t removed?
If a hold remains on your account after the final transaction has been processed, it’s likely an error. Contact the merchant or your credit card issuer to resolve the issue. In rare cases, a hold that isn’t removed could lead to disputes or complications with your credit card account.
Why do some merchants place higher holds than the actual purchase amount?
Merchants may place a higher hold as a placeholder for additional costs or potential damages. For example, hotels might place a hold that covers not only the room rate but also incidentals like room service or damage fees. The final charge will typically reflect the actual amount owed, with the excess hold being released.
Can I request a smaller hold?
In some situations, you may be able to negotiate a smaller hold, especially if you have a good relationship with the merchant or if the estimated charge is significantly higher than what you expect to spend. However, this depends on the merchant’s policies and willingness to accommodate your request.