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If you’re someone who swipes your credit card for pretty much anything and everything, you know just how disruptive a hold placed on your card can be. This could happen at any time — when you fill up your tank at the gas station or when you pay for a hotel room during a weekend getaway. It can feel like the cash flow equivalent of the power getting shut off in your home.

The good news is that credit card holds are only temporary. And chances are, you’ll be able to tap into your credit card in no time. Learn what a credit card hold is, how long a credit card company can hold your payment, and more.

Recommended: When Are Credit Card Payments Due

What Is a Credit Card Hold?

A credit card hold is a two-part process in which the merchant and credit card issuer communicate with one another electronically. On one side, a merchant checks with your card issuer ahead of time if you’re good for a specific, preset amount. On the other side, the card issuer locks in that amount on your credit card balance. That way, the merchant ensures it is paid for the purchase.

In turn, due to how credit cards work, you won’t have access to that amount that’s set aside until either the transaction or the issue gets resolved and the hold is released.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score

Types of Credit Cards Holds

Here’s a closer look at the two main types of credit card holds: authorization holds and administrative holds.

Credit Card Authorization Hold

A credit card authorization hold is usually the more complex of the two types of holds. They’re also known as “pre-authorizations,” and you can think of them as a security deposit.

A credit card authorization usually happens when you’re using a credit card to make a larger purchase or when the final amount of the transaction is unknown. Merchants in industries such as car rental companies, gas stations, and hotels commonly use these authorization holds. Other industries where a card isn’t present may also make a request.

How Does An Authorization Credit Card Hold Work?

Here’s how it works: When an authorization hold on a credit card is requested, the card issuer makes a portion of your credit card balance unavailable until the transaction is finalized.

For example: Say you book a hotel room, and the grand total is $1,000. The hotel asks the card issuer for a hold. In that case, the issuer will make that $1,000 of your credit limit unavailable. Once the transaction goes through, the authorization hold will be lifted.

Depending on the situation, there might be two authorization holds placed on your credit card. For instance, if you used your credit card to pay for a hotel stay, the first hold would be for accommodations. The second might be for the tab at the mini-bar in your room or for the restaurant bill.

Recommended: What is the Average Credit Card Limit

How Long Does an Authorization Credit Card Hold Last?

An authorization credit card hold can typically last anywhere from one to 30 days. Some holds might be released the same day, while others last for a few days after the transaction is settled. For instance, a hotel hold is usually released a few days after you checkout, while a hold placed by a gas station might be lifted the day you spend money at the pump.

If the transaction doesn’t settle before a hold reaches its expiration, the hold will fall off, and the amount that was held will become available again.

Credit Card Administrative Hold

The other main type of credit card holds are administrative holds. Administrative holds can be broken down into two types:

•   Over-the-credit-limit administrative hold: As the name implies, if you go over your credit card limit, an administrative hold will be placed. And yes, you’ll be barred from using your card until you pay down your card so it falls below the credit limit. This is why it’s important to follow the credit card rule of spending within your limit.

•   Late-payment administrative hold: If you’re behind on your credit card payment, your credit card issuer may place a late-payment administrative hold on your card. In this case, one of two things can happen. If you have a solid credit history, the card issuer might only report the late payment to the credit bureaus, and allow you to continue using your card. But if you keep making late payments or your credit is less-than-stellar, a late-payment hold might be placed until you make several months of on-time credit card payments.

When to Use an Authorization Hold

As a cardholder, an authorization hold isn’t really something you have control over. That’s because the merchant is the party that reaches out to the credit card issuer and requests a hold. This is done as a form of security to ensure the merchant gets paid for a purchase.

That being said, there are things you can do to prevent an authorization hold from happening in the first place. (More on that in a moment.)

When Not to Use an Authorization Hold

It’s up to the merchant whether or not to use an authorization hold. This might be requested if there’s a big question mark hovering over the final amount of the transaction.

Such holds are also requested when it’s worthwhile for a merchant to request a hold, given what a credit card is and how they work. This could include if the purchase is for a larger amount, or if the merchant works in an industry where there’s a high rate of non-payment for purchases.

Tips to Avoid Credit Card Holds

You can avoid credit card holds by doing the following:

•   Use a card in-store. To avoid authorization holds, go inside the store and pay at the counter instead of paying online or at the pump.

•   Check the policy beforehand. If you’re concerned about a hold being placed on your account, reach out to the hotel or car rental company ahead of time. See what their authorization hold policy is and what the typical amount and length of the hold is.

•   Check your credit card balance. If you plan on booking a hotel room or car rental, do a quick check of your credit card balance and your card limit. If you’ve already used a lot of your current balance and might go past your limit, consider using another card, or looking for less-expensive options so you can stay within your limit.

•   Pay your card balance. To keep your credit card limits low, aim to pay off your credit card balance. To stay out of late-payment territory and avoid late-payment holds, always make the credit card minimum payment.

Steps for Removing an Authorization Hold

While the merchant can release an authorization hold at any time, as the card holder you’ll need to jump through a few additional hoops to do so. Here’s what you need to do to lift an authorization hold:

•   Request that the hold get lifted right away. As some holds linger a few days after the bill is paid, ask the merchant if the hold can get released as soon as the bill is paid and the transaction settled.

•   Ask the credit card issuer if the hold can be removed. You can also reach out directly to the card issuer to see if a hold can be lifted. In this case, the issuer would contact the merchant and make the ask on your behalf.

The Takeaway

A credit card hold can be a nuisance, but you can also avoid one by taking a few steps. This includes checking your available balance before making a charge and always making sure to make the minimum payments. And if a hold is lingering for longer than you’d like, you can always request that the hold is removed.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

How do I remove a credit card hold?

You can remove a credit card hold by reaching out directly to the credit card company or to the merchant.

How long does a pending authorization hold take?

It depends. If it’s an authorization hold from a gas station, the hold can get lifted the same day. If it’s a hold from a hotel or car rental, where the amount you’ll be putting on the card is unknown, it can often take several days after you’ve settled the final bill for the hold to be lifted.

What can go wrong with an authorization hold?

There’s a chance that a hold can remain on your card after it’s been canceled or settled. In that case, the funds you have available through your line of credit will be limited. If this happens, you should reach out to the credit card issuer to have the hold released.

Can authorization holds prevent chargebacks?

A benefit of authorization holds is that they can prevent chargebacks for the merchant. (A chargeback is when the consumer disputes a charge and requests a refund, in which case the credit card company would withhold the funds from the merchant until the dispute is resolved.) Placing a hold would allow the merchant to avoid this scenario because they can delay processing the transaction.

Photo credit: iStock/Alesmunt

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Your credit card closing date marks the end of your billing cycle, which determines how much you’ll owe when your credit card payment comes due. Your credit card due date, on the other hand, is when you’ll need to make at least the minimum payment if you want to avoid a late fee.

By understanding the implications of both your credit card closing date and your credit card due date, you can better strategize to make purchases and also ensure you make on-time payments.

Recommended: Tips for Using a Credit Card Responsibly

What Is a Credit Card Closing Date?

A credit card closing date determines your credit card “billing cycle,” which spans an interval of about 28 to 31 days. This day might vary each month, but according to the Consumer Financial Protection Bureau (CFPB), it can’t vary by more than four days.

The bank uses your credit card’s statement closing date to determine which purchases are calculated toward the current statement’s total balance and the minimum credit card payment that’s due. Any purchases made after your credit card closing date are applied to the next month’s billing statement.

The closing date for a credit card is also the date the bank uses to calculate your credit card’s finance charges, which are also called the interest charges. Typically, credit card issuers offer a grace period on new purchases starting on the date after the closing date until your credit card payment due date. During this time, interest charges aren’t incurred yet.

Although many credit card companies offer a grace period, it’s not a requirement, so check the terms of your credit card closely.

Recommended: What Is a Charge Card?

What Is a Credit Card Due Date?

Another critical date to remember when it comes to your credit card account is your credit card due date. Payments received by the bank by 5 p.m. on the credit card payment deadline are considered on-time; after this period, your credit card payment is considered past due. (Keep in mind that the time zone in which your bank is located may vary from yours. You might want to check that when trying to pay right before the deadline.)

Your credit card due date is the same for each billing statement. For example, if this month’s credit card bill is due on June 15, your next billing statement will be due on July 15. This due date applies regardless of whether you’re making a full payment for your statement balance or the minimum amount due.

Although you should always aim to make your credit card payment on time, card issuers generally don’t report late payments to credit bureaus until 30 to 60 days after your credit card due date. Late fees might be applied to your credit card account if you don’t make a payment by the credit card payment due date, however, given how credit cards work.

Recommended: When Are Credit Card Payments Due?

Differences Between a Credit Card Closing Date vs Due Date

Here’s a look at some of the key distinctions between credit card payment due date vs. closing date to keep in mind:

How Your Credit Card Closing Date Affects Your Credit Score

On your credit card statement closing date, your card issuer typically reports your account activity, including your card’s outstanding balance, to the three credit bureaus — Experian®, Equifax®, and TransUnion®. This information impacts your credit utilization ratio, which is the ratio of credit in use compared to the amount of credit you can access.

As an example, say your closing date is May 20, and you made a $2,000 purchase on your credit card on May 15. That purchase will be reported and can increase your credit utilization ratio. A high credit utilization ratio can adversely affect your credit score.

If the purchase isn’t urgent, perhaps you might wait until May 21 to put the charge on your credit card. In this scenario, your $2,000 credit card purchase wouldn’t be reported to the credit bureaus until the end of your next billing cycle. And if you pay it off before then, it might not affect your credit utilization ratio.

Determining Your Next Credit Card Statement Closing Date

Knowing how to decipher your credit card bill each month can help you to uncover your statement closing date. Typically, you’ll find your billing cycle dates at the top of your credit card bill. This might be called your “opening/closing dates,” and it typically will be displayed as a date range.

When reading your credit card statement, you can find these dates and then count the number of days between the dates. Then, count forward from the credit card closing date to determine your next credit card statement closing date.

Guide to Changing Your Credit Card Due Date

You might find that changing your credit card due date can help you better manage your credit card payments. This might come up if you get paid on a certain date each month and want your due date to fall closer to payday.

Generally, card issuers are willing to work with you on a due date that will help you make regular, on-time payments. However, credit issuers have different restrictions, so talk to your credit card issuer to see whether it’s flexible.

To change your credit card due date, you can either:

1.    Call the phone number at the back of your credit card to speak to a customer service associate who can help.

2.    Log in to your credit card’s online account and make the change (if available) yourself.

Be aware that it can take one to two billing cycles to see the change on your account.

What You Should Know About Determining Your Time to Pay

Your credit card closing date and payment due date can help you strategically decide when it’s time to pay your credit card bill. For example, if you need to keep your credit utilization low to improve your credit to secure a mortgage loan approval, then paying your credit card bill before your closing date can help.

However, if you simply want to avoid interest charges and late fees on your purchases, making a payment by your credit card due date is sufficient. Still, make sure to stay mindful of the potential to fall into credit card debt, which can be hard to shake (here’s what happens to credit card debt when you die).

Recommended: Can You Buy Crypto With a Credit Card?

The Takeaway

Your payment due date vs. closing date are two very important dates that relate to your credit card account. The closing date indicates the end of the monthly billing cycle, and the payment due date tells you when at least the minimum payment must be paid to avoid a late fee. Being aware of both dates can help you make purchases strategically and ensure you make payments on time.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

Should I pay off my credit card before the closing date?

Paying off your credit card as early as possible is always ideal. Doing so can help you maintain a low credit utilization ratio, which is beneficial to your credit score.

Can I make more than one payment per statement period on my credit card?

Yes, you’re allowed to make more than one payment per statement period to pay off your statement balance. In fact, doing so can help you potentially avoid incurring interest charges and rolling a balance into your next billing cycle.

Can I use my credit card between the due date and the closing date?

Yes, you can use your credit card between the due date and the credit card statement closing date. Purchases made after your credit card due date are simply included in the next billing statement.

Is the credit card closing date the same every month?

Not always. Your credit card closing date might be the same date each month, but billing cycles can vary up to four days from the typical closing date.

Photo credit: iStock/Seiya Tabuchi

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Debit cards make it easy to complete purchases without using cash, writing checks, or charging to credit. Just tap or insert your card, enter your PIN, and the funds will immediately get debited from your checking account. You then grab your goods and go. Simple, no?

Not always. Every once in a while, a debit transaction gets declined. This can be incredibly frustrating (and embarrassing), especially when you know there is money in the account. On a positive note, the issue is often easy to resolve. Here are some simple steps to take when a debit transaction doesn’t go through.

Make Sure Your Card Is Good

Every debit card has an expiration date. Once the date passes, the card gets blocked automatically and becomes useless to the account holder. If you’ve just started using a new debit card because your old one expired, it may not be activated yet. Until it is, you won’t be approved for any debit transactions that require a PIN.

To get your card working again, you may need to get it replaced or, if it’s new, activate the card either online or by phone. When you start using a new card, you’ll want to be sure to update any online payment information. This ensures uninterrupted services for recurring payments you have set up through your card, such as online payments for your cell phone, car loan, streaming and subscription services, and utilities.

Check Your Account Balance

While you may believe you have enough money to cover a purchase, unexpected debits, merchant holds, and pending deposits might have reduced your available balance. That’s why it’s critical to check the balance of your checking account.

You can do this by logging into your account using your banking app or computer, then looking at both your “current balance” and “available balance.” What’s the difference? Pending transactions (which have not yet posted to your account) are included in your “current balance” but not in your “available balance.” It may look like you have enough funds to cover a purchase, but if the money isn’t part of your available balance, you can’t spend it.

If your available balance is lower than you thought, scan your recent transactions and look for:

•   Pending deposits: You may have deposited a check or have a direct deposit that has not fully cleared yet. This means the bank is still verifying that the incoming deposit is valid.

•   Merchant holds: A hold is a way for merchants to reserve a certain amount of funds in a customer’s account to ensure a future transaction can be processed successfully. This can happen for transactions where you won’t know the final amount of the charge until later, such as hotel reservations or a car rental, and can temporarily lower your available balance.

•   Recent withdrawals: Look for any recent withdrawals or debits that you might have forgotten.

•   Errors or fraudulent activity: Check for any errors or unauthorized transactions that could have depleted your funds. If you notice any, reach out to your bank right away.

Recommended: How Banks Investigate Unauthorized Transactions

Know Your Debit Card’s Purchase Limit

If you’ve made some particularly large purchases in the last 24 hours, your debit card might be denied because you’ve reached your daily purchase limit. Banks set daily purchase limits on debit cards to minimize risk if the card is lost or stolen.

The daily purchase limit for a debit card can range anywhere from $300 to $50,000 per day, depending on the financial institution. You may be able to request a temporary limit increase on your debit card to complete your purchase by calling your bank. For security purposes, the representative will ask you to verify your identity.

Check for Holds or Blocks on Your Card

Banks and merchants will sometimes place temporary holds or blocks on someone’s bank account for various reasons. These can temporarily restrict access to your funds, even if you have a sufficient balance.

Here are some reasons why your bank may have put a hold on your debit card or decline a particular transaction.

•   You repeatedly typed in the wrong PIN: If you enter the wrong password three times, your ATM card may get blocked. If this happens, you can generally just wait for 24 hours and your card will be unblocked automatically.

•   Suspected fraud: If your bank detects any suspicious activity on your card, such as an unusually large purchase or unusual use patterns, they may automatically block your card to protect against fraud. Using your card in a new location, especially internationally, can also trigger a security block.

•   Institutional security issue: If there is a security issue at the bank or credit union that holds your account, it may block your debit card to protect your money and details. In such cases, the bank will issue a new card to its customers, free of cost.

The best way to get to the bottom of a card hold or block is to speak with a customer service representative at your financial institution. In some cases, explaining that the purchase is legitimate or that you are currently traveling, and confirming your identity will immediately resolve the problem.

Informing your bank in advance about debit card usage that will be outside your regular routine can help avoid temporary holds and declines.

Recommended: Why Credit Cards Get Declined

Consider Alternate Payment Methods

If you can’t immediately resolve a declined debit card and have a crucial transaction that you don’t want to walk away from, you may need to use an alternate payment method. Here are some options to consider.

•   Credit card: Even if you prefer debit over credit, having a credit card in your wallet can serve as a backup if your debit card fails.

•   Cash: Though not every place of business accepts cash, it can be useful to have cash on hand to cover necessary transactions in the event your debit card fails.

•   Mobile payment app: If you have a payment app on your phone that is connected to a credit card or linked directly to your bank account, you may be able to use that instead of your debit card.

•   Bank transfer: For larger transactions, you may be able to make the payment by transferring money from your savings or checking account directly to the recipient.

The Takeaway

Dealing with a declined debit card can be annoying and stressful. To get to the root of the problem, you’ll want to first make sure your card is up to date and, if it is, check your account balance to confirm there are sufficient available funds to cover the purchase.

If you have enough funds, you might next call your bank to see if there’s a temporary hold on your card due to any security issues. By confirming that the transaction is legitimate and verifying your identity, they may lift the hold.

Being proactive and keeping a close eye on day-to-day activity in your checking account can minimize debit card declines and ensure smooth transactions in the future.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

Why would a debit card be declined even if I have money in my account?

A debit card may be declined even if you have enough money in your account to cover the transaction due to various reasons. These include:

•   Exceeding daily transaction limits

•   Multiple incorrect PIN entries

•   Using an expired card

•   Using a new card that hasn’t yet been activated

•   Suspected fraud

If your debit card gets declined despite sufficient funds, it’s a good idea to contact your bank. You may be able to quickly resolve the problem and get your card working again.

What should I do if my debit card is declined due to suspected fraud?

If your debit card is declined due to suspected fraud, you’ll want to immediately contact your bank’s customer service department. They will review recent transactions with you and, if necessary, cancel that card and issue a new one.

Once you receive the new debit card, you’ll want to change your PIN and monitor your account for any further suspicious activity. Banks often have fraud protection services to assist and safeguard your funds.

How long does it typically take to resolve a debit card decline issue?

The length of time it takes to resolve a debit card decline will depend on the cause. If the problem is insufficient funds, you may be able to quickly fix it by transferring money from another account. If the issue is suspected fraud, you may be able to clear it up right away by calling customer service, verifying your identity, and letting them know that the charge is legitimate.

Other scenarios may take longer. For example, if your debit card has been compromised or has expired, you may have to wait until you receive a new card in the mail.

Photo credit: iStock/Jacob Wackerhausen

SoFi members with direct deposit activity can earn 4.30% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.30% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.30% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.