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Dr. Don Taylor, CFA, Bankrate.com advice columnist Getting a 'hold' on your credit/debit card

Dear Dr. Don,
When a bank places a "hold" on your funds when you use a debit card or credit card (a credit card -- Visa in this case), what is the minimum period of time they will hold the funds?

My particular institution has the annoying habit of releasing these funds after three days. Then the firm where I charged a purchase comes back 10 to 12 days later and sucks the funds from the account, playing havoc on daily balances --I account for the outflow, then it's back, then it's gone again.

I'm wondering if Visa (merchant services) or banking laws have any requirements in this space.
-- Andy Albatross

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Dear Andy,
You're a bit unusual in complaining that the hold is released too soon. The typical complaint is that the hold stays in place for too long. Service providers such as hotels, car rental companies and even your local gas station put a hold on your account based on the expected bill in order to lock in the credit capacity or funds available to pay that bill.

It sounds like you're managing your finances a bit too closely. What I mean by that is a hold isn't a charge, it's a placeholder reserving credit capacity or funds availability when the charge actually goes through on the account. If you're bumping up against your credit limits because of holds, you should consider talking to your card provider to raise that limit. 

I spoke with a public relations manager working for Visa USA and he passed along this statement by Rhonda Bentz, a vice president with Visa USA:

"Visa does not issue cards and, thus, does not place holds on cardholder funds. The financial institutions that issue Visa cards decide whether to place holds on cardholder funds. Some card-issuing financial institutions, in order to protect themselves against the risk that cardholders will spend more money than they have in their accounts, place a hold on funds in anticipation of the final transaction amount. To help ensure that holds do not disrupt cardholder access to the funds in their accounts, Visa requires that card-issuing financial institutions release all holds within three business days of the authorization request or when the transaction clears, whichever is earlier."

It's Visa's three-day rule that releases these holds on your account, even if the charge hasn't gone through yet.  If you've noticed that a particular vendor is the problem child when it comes to posting charges within that three-day window, then talk to that vendor about their posting practices.

You're not paying finance charges on blocked funds on your credit card. Your merchant agreement with the financial institution that issues the credit card determines how the average daily balance is calculated and the governing law is the Truth In Lending Act that is overseen by the Federal Reserve Board as Regulation Z.

To ask a question of Dr. Don, go to the "Ask the Experts" page, and select one of these topics: "financing a home," "saving & investing" or "money."

Bankrate.com's corrections policy-- Posted: May 7, 2007
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