An authorization hold should not hold you hostage
A common business practice may be putting your credit card on hold, and that can have nasty consequences if you’re on a trip or need credit in a hurry.
Credit is a convenience; it allows you to charge a meal on your credit card, pay for an appliance with an installment plan, or take out a loan to buy a house. With credit you can make a purchase when you lack ready cash, and you can enjoy the purchase while you are paying for it.
However, when dining out at a fancy restaurant or spending the night away in a hotel, be careful about authorization hold.
The issue was first identified by the Better Business Bureau when a customer complained that a restaurant had put through a charge equal to his bill plus 20 per cent, even though he had left the server’s tip in cash.
Upon investigation, the BBB soon discovered that this has been a common practice.
When you pay for your restaurant bill and give the server your credit card, they put an authorization hold on your account for $120 if you give a generous tip.
Despite the tip, your bank or credit card company “holds” that $120 for a couple of days until the actual amount of your charge is processed.
Credit card processors discourage vendors from doing these kinds of holds. However, these are perfectly legitimate as long as the vendor notifies customers of the practice.
BBB advises consumers to keep tabs on their credit and bank accounts online, especially when traveling, and read the fine print on hotel agreements.
When dining out, pay for your check and tip together with either credit or cash, but not both.
If possible, keep a cushion on available funds on credit cards by paying off the balance regularly.
About the Author (Author Profile)
Markham began his journalism career writing columns in the mid-1980s for Western People Magazine, then reported for a small Saskatchewan daily. He has spent most of his career in media and communications, likes to dabble in politics, was actively involved in economic development for many years, thinks that what goes on in the community is just as important as what happens provincially and nationally, and has a soft spot for small business (big business, not so much). Markham is a bit of a contrarian and usually has a unique take on the events of the day.