What is a credit card hold and how does it work?
Quick insights
- A credit card hold is when a portion or all of your credit is temporarily frozen, often in anticipation of a purchase.
- Merchants may implement a hold to help ensure your card is valid, and you have the available credit to cover a purchase.
- Card issuers may also place a hold on your credit if they suspect fraud has occurred or you’ve exceeded your credit limit.
Seeing a hold on your credit card can be startling, especially if you didn’t know it was coming. A hold placed on your card means a portion of your credit is not accessible. Holds are typically temporary, but they can be disruptive if your card is declined due to a lack of available credit.
If you have credit cards, it can be helpful to understand what holds are, how they work and when you may see them. That’s what we’ll cover in this article.
What are credit card holds?
A credit card hold is an authorization to temporarily freeze your credit. Holds are implemented by a merchant or your card issuer to prevent you from accessing a portion, or sometimes all, of your credit.
Merchants typically place holds to help ensure your card is valid and you have credit available to cover the pending charge. Card issuers might put holds on your card if they suspect suspicious activity has occurred, if you’ve gone over your credit limit or if you have missed multiple payments.
Holds may first appear on your account as a pending charge. Cardmembers cannot access these funds until the hold is released. It’s often released once the charge goes through or an account issue has been resolved.
Types of credit card holds
There are two common types of credit card holds: authorization and administrative holds.
Authorization holds
Authorization holds—sometimes called pre-authorization holds—tend to be more common. They are placed by businesses when you initiate a transaction, often to ensure that enough funds are available to cover the purchase.
These holds may happen before the final purchase amount is known. For example, if you use your card to book a hotel room, the hold may cover the cost of the room as well as potential charges for incidentals like room service or cleaning fees.
Merchant-initiated holds are more common with certain types of businesses, including:
- Hotels
- Rental car companies
- Gas stations
- Cruise lines
- Restaurants
These holds can last from a few days to a week, and can be influenced by how quickly a merchant processes the transaction and your card issuer's policies. Authorization holds reduce your available credit for the duration of the hold, which can temporarily affect your purchasing power.
Administrative holds
Administrative holds are placed by your financial institution or card issuer, often due to suspected identity theft or other account issues. A card issuer may impose an administrative hold if you exceed your credit limit or have multiple late payments.
The duration of this type of hold varies widely, from days to much longer, depending on the complexity of the issue being resolved. Administrative holds can freeze a portion or all of your available credit.
How to remove a hold on a credit card
Removing a hold on your credit card can sometimes be necessary to free up your credit.
Here are a few steps you could take to try to remove a hold:
- Contact the merchant: Often, holds are automatically lifted once the final charge is processed. You may want to ask for specifics about why the hold was placed and the expected time for it to be released.
- Contact your credit card issuer: If contacting the merchant doesn’t resolve the issue, consider reaching out to your card issuer's customer service. Explain the situation and ask for details about the hold, including how long it is expected to last.
- Provide documentation: Be prepared to provide documentation that supports your request to remove the hold. This might include receipts or billing statements proving that a transaction was completed or canceled. For disputes, you may need to provide communication records with the merchant or additional evidence that supports your claim.
Holds are typically removed according to timelines provided by the merchant or card issuer. If a hold is not removed within the expected timeframe, follow up with the merchant or your bank. You may want to keep records of your communications for reference in case the issue escalates or requires further intervention.
In summary
Credit card holds are usually a temporary freeze on all or a portion of a card’s available credit. The two main types of holds are authorization holds (placed by a merchant) and administrative holds (placed by your card issuer). Holds can be placed by merchants in anticipation of a purchase or by your card issuer if there are account issues like suspected fraud or missed payments. It may help to check your credit card account and statements regularly to monitor and plan for unexpected holds.
