Thursday, June 2, 2011


This post can prevent you from unknowingly bouncing checks, running short on money you know is in the bank, and potentially more.

Many of us know that when we book a vacation, the hotel or resort will put a "hold" on our debit card. This basically means that the hotel/resort holds that amount until after you have checked out and the amount you owe has cleared the bank. Hotels say that this is to protect them from the cost of damages you may incur while staying there.

Also, you may know that many gas stations do a similar hold when you use your debit card to pay for gas at the pump. The gas station typically runs a $1 hold to verify that the debit card you are using is linked to an actual, in use account. Most people don't notice the $1 hold. Once the amount you pumped for gas clears the bank, the $1 is released back into your account.

Now, before I go further....let's make sure we understand the full impact of this.

Scenario #1: You go on vacation for one week. Let's say you have $2,000 in your account. The hotel is going to charge you $600 for the week and have told you that you must allow a $400 hold. After checkout (not at, but after) the $400 will be returned to your account if no damages need to be deducted. Let's say you spend $1,000 while on vacation and check out of your hotel on Friday evening. What are you left with in your bank account? If you say $400, you are wrong. Although you know you'll be getting that $400 credited back......a "hold" means that you can not use that money! The hotel can hold that money for however long they determine before crediting it back to your account. Most hotels handle this quickly and you can depend on your money being there within 5 business days. However, you checked out on Friday evening, which means no money will be released until next week.

Scenario #2: You go to the gas station. You've had alot of financial emergencies of late and you know you only have $40 in your account. You pump $20 and gas and head over to the ATM to take the rest out in cash. How much can you get out? Most likely, only $19 since the gas station made a $1 hold and is waiting for the $20 to clear before releasing the hold. Remember, when money is in a "hold" you can't use it!!

Now, let's get into what is happening I someone nearby.

Scenario 1 (this is a TRUE STORY as I heard it from an employee at the bank today who I called to explain confusing charges on my account....more about that later) A single and pregnant mother goes to the gas station. She runs her debit card at the pump and pumps only $20 in gas. This leaves her $120 in her account to pay another bill. Money is tight and she literally lives paycheck to paycheck. She goes to the bank the next day to withdrawl the $120 to pay her bill and is shocked when her bank balance shows only $50. She speaks with the teller and finds out that in addition to the $20 she pumped in gas, the gas station has also placed a "hold" on her account for an additional $70! She's told by the bank (the same bank she works at) that there is nothing that can be done. She's told that it can take up to 72 hours for the $20 she used to purchase gas to clear the banks. Until that is done, the gas station will keep the $70 hold. Once the $20 clears the bank to cover her gas purchase, the gas station will then release the $70 hold and she'll be able to use it. However, by then the bill she has due will be past due and she'll have to pay the late she doesn't have. (remember, this really happened)

Scenario #2: This is my personal experience and how I found out about Scenario #1. I went to the Shell gas station in Richfield North Carolina (hint hint...don't go there). I used my debit card at the pump and spent $32. The next day, I looked up my account online while bill paying and saw that in addition to the debit of $32 pending, the same gas station had also DEPOSITED $36 into my checking account. Completely confused, I dug around only to find that the same gas station had also withdrawn $36 from my savings account. I called my bank. Here is what happened:

Gas stations have started to deal with more people stealing gas at the pumps. People figured out that if they only kept $1 in their account, they could then fill up on gas with their debit card. They'd then go close their account, and the gas station would be out of money. So, gas stations decided that they are going to put high holds on debit cards. When I drove up and swiped my debit card, I had a $36 hold put on my account. I then pumped $32. However, I had other charges pending and due to having an unexpected vet bill over the weekend, I didn't have enough in my account to cover BOTH the $32 I pumped plus the $36 hold the gas station put on my card. So, since I have overdraft protection, the $36 was moved from my savings account and into my checking account to cover the "hold". Keep in mind, I won't be able to touch that $36 until after my $32 gas clears the bank and then the gas station releases the $36 hold they've placed on my account.

You may not think that's to big of a deal. But, let's look at another scenario.

Scenario 3: Manny decides to fill up his work truck. He's paid his bills this week and will have enough left over after getting gas to feed him and his family for the week. Money is tight, but his work truck is his income and he's gotta have gas. So, Manny goes to the pump and uses his debit card. It costs him $150 to fill up. Manny had already told his wife that he was leaving $150 in the bank for groceries, so while he was pumping gas she was purchasing $100 in groceries, wanting to leave a small emergency fund in case something comes up during the week. In a few days, Manny gets a letter from the bank that he has "bounced" a check at the grocery store. Bewildered, he heads to the bank.

Although Manny and his wife made sure that there was enough money in the bank to cover the gas and groceries, as well as leaving $50 should they need it.........there was one thing they didn't know about. You see, the gas station had put a $100 hold on Manny's debit card when he got gas. So, in addition to the $150 he used to fill up, another $100 was put on hold. This caused the purchase from groceries to cause their account to overdraw. Since Manny doesn't have overdraft protection, he now has to pay for the overdraft. He owes fees not only to the bank, but the grocery store as well.

Even worse, the day after the check bounced....the gas station released the money they had put into a "hold".

This is a serious issue. I asked today at the bank and found out that there is no regulation on gas stations placing holds on the accounts. Once you scan your card, you've given them permission. There is nothing you can do.

Maybe you are in a situation where it won't really affect you (if so thank God for how He's blessed you). Yet, chances are, there is someone you know that it could affect. What about the elderly living on fixed incomes? Maybe you know someone living off their unemployment check after getting laid off from the company they'd worked at for 30 years. Do you know a single parent who lives paycheck to paycheck?

Spread the word. People must know about this. Watch your transactions and when you see this happen, let everyone know which gas station it happened at. Leave a comment in the section below with the location of the gas station and the amount of hold they placed on your account. Boycott those gas stations and let them know we won't allow this! If we don't stop this now....what's next?

Remember, these transactions won't show up on your usual monthly statement. You can check your balance daily to determine if there is money on hold. Call your bank and lodge a complaint. Call the gas station managers and owners and lodge a complaint. Let them know they've lost your business and you're telling everyone about their practices!!

Together, we can make a difference.

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