Gas stations charge cards $175 when they swipe at the pump

Gas stations are now charging a hold fee of up to $175 on credit and debit cards used at the pump, reports the the wall street journal.

In a typical gasoline purchase, the customer swipes a credit or debit card before pumping fuel. Thus, there is no way of knowing how much the customer can actually spend. Thus, a pre-authorization fee is placed on the card to ensure that enough funds (or credit limit) are present on the account to cover the largest possible transaction. Once the customer has finished pumping, the card is charged for the gas actually used and the holdback charge is released.

Update: We’ve put together a guide on how to avoid these blockages, and you can read it here. The original story continues below.

Fees were previously limited to $125 by Visa and Mastercard, but that limit was increased to $175 earlier this year. The change was made because $125 would no longer cover filling a tank in one transaction for larger vehicles. Hold fees are set by individual gas stations, with the upper cap set by card networks. The move comes as gasoline prices hit record highs, with the US average topping $5 a gallon for the first time earlier this month.

Hold fees can cause several problems for customers. It can take hours or even days for charges to clear, locking up funds or credit limits for long periods of time. Worse still, holds can trigger overdrafts on accounts receivable, costing customers dearly in fees.

Many of us are familiar with the high retainer fees imposed by hotels and car rental companies. However, they came as an unpleasant surprise at the gas station.

A poster on Reddit thought the $175 charge was fraudulent after buying gas at an Exxon station. Previously, they hadn’t noticed a lower pre-authorization fee which was around $1 instead of $175. These lower fees served more to check if the credit card was valid and functional rather than to ensure that the card could cover the maximum possible transactions.

It’s a policy that could cause major problems for those with little money in their account. At a gas station using such fees, it would not be possible to pay by card at the pump, unless one had at least $175 in available funds, even if the intention was to buy only $20 of essence. Pre-paying for a certain amount of gas is one way to avoid the problem. Alternatively, a customer could find an ATM and pay cash, likely incurring withdrawal fees in the process.

Many drivers will not be affected by the change. With a high credit limit or lots of money in a debit account, charges are often released before the customer notices. However, with overdraft fees now over $30debit card users are at high risk of being bitten if they are not careful.

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