Visa offers some relief from painful 'debit holds'

The organization that writes the rules for processing payments you make with your Visa card will change them this fall to reduce the chances that an annoying “debit hold” placed on the money in your bank account will cause inconvenience or, in some cases, overdraft fees.

The rule in question has to do with how gasoline purchases made with a debit card are handled. Currently, when you swipe your debit card at the pump, the gas station can place a debit hold on up to $75 of the money in your account until the actual transaction clears through the system. Since that can take as much as two to three days, you may buy $20 worth of gas but be denied access to $75 of your money for several days. This can lead to bounced checks or other overdrafts, and the onerous penalties that they bring. (See "The Dark Secrets of Debit" for more of the problems that debit card users face.)

Under its new “real time clearing” rule, however, Visa will make it possible for holds to clear in as little as a few minutes and no more than two hours. “Consumers are feeling enough pain at the pump and we strive to relieve some of those frustrations through real-time clearing,” says Stacey Pinkerd, head of Global Debit Products at Visa.

The rule change, which will take effect this October, follows years of lobbying by Consumers Union and other organizations that complained the old rule was unfair to consumers. Gas stations must adopt the new rule in order for their customers to reap the benefits. 

“Americans are already getting squeezed by exorbitant gas prices,” says Michelle Jun, staff attorney for Consumers Union. “It’s unfair for gas stations to impose a hold on their customers’ own money for amounts that exceed how much they’ve spent on gas. Visa deserves credit for taking this step. Now it’s time for MasterCard to end unfair debit holds at the pump and for every gas station to adopt this new process.”

Unfortunately, the change only applies to gasoline purchases, and not to other merchants that can also place debit holds, including restaurants, hotels, and car rental agencies. Moreover, Visa’s largest competitor—Mastercard—has yet to respond to calls to change its debit hold rule. CU is encouraging consumers to send a message to Mastercard telling them to end this problem with its debit cards.

You can find out how quickly your gas purchase is processed by checking your bank account on-line.  Once Visa’s new rules go into effect in October, you should ask your local gas station if it processes your gas purchase at the pump in real time.  You can also check this by getting your account balance two hours after using a Visa debit card to buy gas to see if the purchase cleared. If your local gas station doesn't process your purchase in real time, you can avoid debit holds by paying the station attendant with your debit card and PIN rather than swiping it yourself. Of course, you can also pay with cash.