What’s Behind Pre-Authorization Holds When You Fill Your Tank?

Gas stations temporarily tack on money to your credit and debit cards for fraud protection

A man is inserting a credit card at a gas station pump

Donna Fuscaldo,

AARP

En español

Published May 27, 2022

Sticker shock at the gas pump isn’t the only surprise consumers face when filling up. If you’re using a credit or debit card for payment, you may be shocked to learn there’s a pre-authorization amount placed on your credit or debit card. It’s a common practice among gas stations, but one that’s not well known among many consumers. With gas prices soaring, the pre-authorization hold could temporarily limit your purchasing power or result in overdraft fees depending on how much you fill up.

Why do gas stations do it?

The pre-authorization hold is designed to protect the gas station from fraud. The merchant doesn’t know how much gas you’re getting and wants to ensure there’s enough credit to cover it. It’s up to the gas station’s discretion to set the hold amount.

How does the hold work?

You pull up to the gas pump and swipe your payment card. A request for a predetermined amount, which may be more than the purchase amount, is sent to the credit card issuer. The pre-authorization hold can range from as little as $1 to more than $100. In some instances, the amount of the hold is displayed on the payment terminal.

A gas station could place a $50 hold when authorizing your card purchase for $20 worth of gas. With gas prices up 46 percent in the past year, the hold may be even higher. Gas stations want to make it as easy as possible for you to get gas. If they set the hold too low, you may have to engage in more than one transaction to fill up, which could lead to frustration. “They put a hold on your card to allow you to pump up to that amount because they don’t have the transaction amount,” says Patrick De Haan, head of petroleum analysis at GasBuddy. “It’s more of an inconvenience to have to run two different transactions.”

It’s important to note that while gas stations set the pre-authorization amount, the card issuers determine how long the hold stays on your account. The hold can last up to 72 hours.

Why can it be problematic?

The pre-authorization is no big deal if you have enough credit on your credit card or cash in the bank. It becomes a problem when it temporarily limits your purchasing power or puts you in arrears.

Let’s say you have a $1,000 credit limit on your credit card and you’re carrying an $850 balance. If you purchase $50 worth of gas and have a $50 pre-authorization amount, you’ll have only $50 left for purchases until the hold is lifted.

For debit card holders, this could create an overdraft situation if there isn’t enough cash in the bank to cover the gas and the hold. That results in an added fee to get gas. If you don’t have an overdraft, the transaction would be denied if you don’t have enough cash to cover the hold.

To avoid a pre-authorization hold or minimize its impact, do the following:

Pay with cash.
Use a credit card, instead of a debit card.
Pay in the store and input your debit card’s PIN. The hold clears nearly instantaneously once the transaction is complete. You could still be prevented from getting gas if the hold amount is too high.

Donna Fuscaldo is a contributing writer and editor focusing on personal finance and health. She has spent over two decades writing and covering news for several national publications including The Wall Street Journal, Forbes, Investopedia and HerMoney.

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