How Long Does a Temporary Hold Last?
Understand how temporary financial holds work, their typical duration, and what steps to take if they linger on your account.
Temporary holds are a common feature in daily financial transactions, often appearing as pending deductions on bank or credit card statements. These authorizations can sometimes cause confusion by temporarily reducing available funds or credit. This article will explain what temporary holds are, how long they typically remain active, and what actions to take if a hold persists longer than expected.
What Temporary Holds Are
A temporary hold, also known as an authorization hold or pre-authorization, is a temporary reservation of funds on a credit or debit card. Its primary purpose is to verify that sufficient funds or credit are available for a potential future transaction. It acts as a placeholder, reducing the available balance without actually deducting money.
These holds are frequently encountered in various consumer interactions. For instance, when reserving a hotel room, a hold may be placed for the estimated cost of the stay plus incidentals. Car rental companies often place a hold for the rental cost along with a security deposit. At gas stations, a common practice involves placing a pre-authorization for a fixed amount, such as $75 or $100, before fuel is dispensed.
Online purchases also frequently involve temporary holds. When an order is placed, a hold is typically put on the card for the purchase amount. The actual charge processes only when the item ships or the service is rendered. The hold serves as a commitment that funds will be available when the merchant is ready to finalize the transaction.
Typical Timeframes for Temporary Holds
The duration of a temporary hold can vary, but it commonly ranges from three to ten business days. This timeframe is influenced by several factors, including the merchant’s internal processes, the cardholder’s financial institution, and the specific type of transaction involved. Most temporary holds are designed to be released automatically once the final transaction is processed or a predetermined period expires.
Merchants play a significant role in the release of these holds. After a service is rendered or goods are shipped, the merchant typically sends the final transaction amount to their payment processor. This action often triggers the release of the initial authorization hold. However, if a transaction is cancelled or not completed, the merchant is still responsible for initiating the release of the hold.
Even after a merchant releases a hold, the customer’s bank or credit card issuer requires time to process this instruction and update the account balance. This processing time can add a few business days to the overall duration of the hold. Financial institutions work to clear these holds efficiently, but internal procedures and system cycles dictate the exact timing.
Certain types of transactions may have inherently longer hold periods. For example, holds for hotel stays or car rentals might remain active for the duration of the service, plus several days afterward, to account for any additional charges or damages. In most cases, the hold will simply disappear from the account statement as it expires or is settled.
What to Do About Lingering Holds
If a temporary hold remains on an account for an extended period beyond the typical timeframe, there are specific steps to take to resolve the issue. The first action involves reviewing personal financial statements. Checking online banking or credit card statements can provide details about the hold, including the merchant’s name, the date of the transaction, and the amount.
The next step is to contact the merchant directly. Since the merchant initiated the hold, they are often in the best position to resolve it. When contacting the merchant, it is helpful to provide the date of the transaction, the exact amount of the hold, and any reference or authorization codes if they appear on the statement.
If contacting the merchant does not resolve the issue or if the hold persists, the cardholder should then reach out to their bank or credit card issuer. The financial institution can investigate the hold on their behalf. When speaking with the bank, it is important to provide all gathered details, including the merchant’s name, transaction date, and the amount. While the bank may not be able to immediately remove a hold placed by a merchant, they can often provide insights into its status or initiate a dispute process if necessary.
Throughout this process, maintaining detailed records of all communications is advisable. Documenting the dates and times of calls, the names of representatives spoken with, and any reference numbers provided can be beneficial. This documentation provides a clear trail of efforts made to resolve the lingering hold.