Understanding Credit Card Holds: How Banks and Merchants Control Your Available Funds

When you swipe your card at a gas pump or check into a hotel without a confirmed final amount, financial institutions use a security mechanism known as a credit card hold—a temporary freeze on your account to protect merchants and ensure sufficient funds. This practice may seem straightforward, but it involves multiple players with competing interests and rules that can leave cardholders confused about where their money has gone.

What Is a Credit Card Hold and Why Do Merchants Use It?

A credit card hold (sometimes referred to as a “block”) is a temporary reservation of funds placed by merchants when your purchase total cannot be determined in advance. The mechanism is designed to protect the merchant by verifying that you have sufficient available credit or funds to complete the transaction. As Gray Taylor, executive director of Conexxus—a nonprofit that establishes technology standards for convenience stores and retail petroleum companies—explains, “They’re used in situations where the total purchase is not known and cannot be easily returned.”

At a gas pump, for example, the attendant doesn’t know how much fuel you’ll purchase. At a hotel, your bill may change based on room service, minibar charges, or extended stays. Without holds, merchants would face significant financial risk. A credit card hold solves this problem by requesting authorization for a preset amount before the actual transaction occurs.

The Three-Party System: How Card Networks, Banks, and Retailers Interact

Understanding how credit card holds work requires recognizing that three distinct entities have a hand in the process, each with different responsibilities and limitations:

Card Networks Set the Ceiling Payment networks like Visa, MasterCard, Discover, and American Express establish maximum timeframes for how long a hold can remain active. For instance, Visa permits holds to last up to 30 days, while American Express caps most of its holds at seven days (extending to 15 days for its Bluebird and Serve products). These limits exist to prevent unreasonable restrictions on cardholder access to funds.

Banks and Credit Unions Control the Actual Duration Your card issuer—the bank or credit union that sends your monthly statements—determines the specific hold duration within the network’s limits. This institution places aside the hold amount and communicates back to the merchant to confirm the authorization. With a credit card, your available credit line is temporarily reduced; with a debit card, your available balance is reduced. The timeframe can vary significantly based on the bank, the type of card, the retailer, and even the day of the week.

Merchants Set the Hold Amount (But Never See It) Retailers decide how much to hold—typically a conservative figure designed to cover maximum reasonable purchases. Importantly, merchants never actually receive this held amount. They only receive the final transaction total after purchase completion. The difference between the hold and the actual charge is credited back to the cardholder. As Taylor notes, this creates a critical misconception: “Some banks will tell the consumer that ‘the merchant is holding your money.’ That’s not true. We never see that money.”

How Long Do Holds Actually Last?

The duration of a credit card hold depends on a combination of factors: the type of card (credit versus debit), how you paid (PIN entry versus signature), which financial institution issued the card, the merchant’s policies, your transaction history, and even the day of the week.

Debit Cards With PIN Entry Are Fastest When you use a debit card with a PIN at the pump, funds are typically returned within minutes. Ravi Subbaraya, product manager for checking and payments at PNC Bank, recently tested this personally—his banking app showed the unspent portion of a $50 hold returned to his checking account before he even returned to his vehicle. “Most fuel tends to process much faster,” he confirms.

Credit Card Holds Often Last Longer Credit card holds typically persist for one to five business days, with two days being the current average according to Andrew Urbaczewski, professor of business analytics at the University of Denver. However, some financial institutions may maintain different hold policies for different merchants or transaction types—a gas pump hold might clear within hours, while a hotel hold could remain for a day or two after checkout.

Card Issuers Hold the Power on Duration

According to Jeff Lenard, spokesman for the National Association of Convenience Stores, the card issuer ultimately determines hold duration, not the merchant or card network. Visa’s spokesman Andy Gerlt acknowledges that while Visa’s rules technically allow holds lasting up to a month, few institutions actually employ such lengthy freezes. “More likely it’s one to five days,” he says, and “it’s gotten a lot better now” compared to historical practices.

This power extends to creating distinct policies per merchant type. Some issuers will place holds only on debit card transactions, not credit card transactions. Hotels have adapted their practices in recent years—instead of blocking the entire room charge upfront, many now distribute smaller holds throughout the guest’s stay, offering more flexibility to cardholders.

If you believe a hold is lasting too long, the appropriate conversation to have is with your card issuer, not the merchant. When shopping for a credit card, bank, or credit union, asking “How long do your card holds last?” is a savvy consumer question.

Why Merchants Set Hold Amounts

Retailers establish hold amounts conservatively to cover likely maximum purchases. At gas stations—the most common users of holds—the preset amount typically ranges from $50 to $125, depending on the location. This ensures sufficient authorization even for drivers filling large tanks. Critically, these amounts don’t automatically adjust with fluctuating fuel prices. Merchants “tend to set up a hold amount and keep it,” according to Lenard.

Card networks require merchants processing payments before the total is known to either implement holds or absorb losses from potential chargebacks. If merchants skip the hold process, they become vulnerable to expensive chargeback disputes. As Taylor explains, “If a merchant doesn’t do a debit hold, they will be eaten alive by chargebacks.”

Simple Strategies to Minimize or Avoid Holds

While credit card holds are standard practice in many industries, several approaches can reduce or eliminate them—each with distinct tradeoffs:

Pay Cash at the Pump This removes the hold entirely but sacrifices the convenience and fraud protection of cards. It’s also increasingly impractical as fewer merchants accept cash exclusively.

Request a Specific Dollar Authorization Ask the attendant to authorize a limited amount before you swipe—“$20 on pump seven,” for example. Since the merchant now knows the precise total, no hold is necessary. Many gas stations allow this via intercom at the pump, though you may need to go inside or speak through a speaker.

Use Debit Card With PIN PIN-based debit transactions travel over a different authorization network, allowing the unused portion of the hold to return quickly—sometimes within minutes. MasterCard recommends that card issuers return overages within one hour, though issuers ultimately decide their own timelines. However, PIN debit transactions typically offer reduced liability protection compared to signature-based transactions, which often provide 100 percent fraud protection.

Communicate With Hotels in Advance If traveling, contact the hotel before arrival to understand their hold policy. Ask the specific amount, frequency of charges, and whether negotiation is possible. Recent industry changes have made this more favorable for guests, but advance confirmation prevents unpleasant surprises.

Arrange Alternative Payment Methods Some hotels require larger cash deposits if you prefer to pay this way rather than using a card. Others accept prepayment, which eliminates holds entirely. The terms vary significantly by property.

Request a Temporary Credit Limit Increase While this doesn’t prevent holds, it expands your available credit to accommodate them. If traveling extensively, you can ask your card issuer to temporarily increase your credit line for the duration of your trip. Note that formal credit inquiries may temporarily reduce your credit score.

As Shelle Santana, professor of business administration at Harvard University, observes: “The options are limited. The larger the hold, the larger the problem.” Understanding how credit card holds work—and knowing which strategies suit your situation—empowers you to manage these temporary account freezes more effectively.