Credit Card Holds: A Quick Guide

Ever heard of credit card holds? In this post, we’ll outline two types of holds to look out for.

Most commonly, certain merchants place a temporary hold on your credit, known as authorization holds. Authorization holds don’t suspend your entire account, but rather hang onto a portion of your available credit to ensure that you have enough credit to cover an upcoming transation, like a hotel booking or fuel at the gas pump. Authorization holds usually drop once your final transaction clears.

In other cases, your credit card issuer can temporarily restrict your credit card account if they suspect fraud, need to perform an account review, or in response to delinquent payments. These restrictions drop once you pay what you owe, continuously cover your bills on time or – in the case of fraud – when you confirm activity with your bank.

For the full breakdown on what credit card holds are and how they work, keep reading. 

What Are The Two Different Types of Credit Card Holds? 

As mentioned, there are 2 types of credit card holds you may encounter:

1. Authorization Holds or Pre-Authorization holds

• When a merchant places a hold on a portion of your available credit to verify that your card functions properly and that you have enough money to fund the transaction in question

1. Issuer Restrictions (Sometimes called Account Holds or Freezes)

• When the credit card issuer restricts or suspends account activity due to missed payments or fraudulent activity.

Who Implements a Credit Card Hold?

Credit card holds are often implemented by companies or banks, depending on the type of hold.

Here are some common examples of who you can expect to place a hold on your account:

• Credit card issuers (in the case of account restrictions)
• Gas stations 
• Car rental companies 
• Hotels/resorts 
• Online retailers also sometimes place holds on your credit until your items have been shipped

How Long do Credit Holds Last?

How long your credit card hold lasts also depends on the hold type, the merchant, the issuer, and/or the transaction.

Merchant authorization holds can last a few to several business days, depending on the purchase. Hotel and car rental holds tend to stick around the longest. 

When it comes to account holds, fraud-related account freezes remain active until you confirm authorized activity with your bank. Alternatively, delinquency holds last until you pay what you owe and/or demonstrate positive credit habits.

How to Get Rid of a Credit Card Hold

There are a few ways to get rid of a credit card hold on your account:

• Authorization holds: Most authorization holds expire automatically after the final transaction is processed. Some merchants may allow you to request an expedited release, but this is never guaranteed.
• Account Restrictions: First, pay off any missed payments that you owe. Then, continue to pay off your balance on time and keep your credit utilization ratio relatively low (below 30%). You may need to do this consistently to establish creditworthiness again. To get out of account freezes due to fraud, you’ll need to contact your issuer to confirm authorized activity. 

How to Avoid a Credit Card Hold

You can avoid account restrictions by practicing good credit habits, such as routinely paying off balances before their due date and keeping your credit utilization ratio low. 

Authorization holds are trickier to avoid, and you might not be able to dodge them completely. If you’re particularly wary of them, ask merchants before placing an order or booking a reservation if they tend to place credit holds on credit card accounts. By asking in advance, you’ll be able set aside some extra credit to account for the hold.

Conclusion

There are two main types of credit card holds that you may encounter: authorization holds and account restrictions. Authorization holds are typically implemented by merchants to verify that your credit card is working and that you have enough credit to cover the cost of your purchase. Account holds are implemented by your credit card issuer and usually take place due to missed payments or fraud. 

You cannot avoid authorized credit card holds completely, but you can plan for them in advance by keeping extra credit available. For the most part, you can avoid complete account holds by demonstrating positive credit habits. If your account is restricted due to suspected fraud – something you cannot necessarily avoid – be sure to call your bank to confirm authorized activity.