Do you use a debit card to purchase your fuel? So many of us do. You know, it is that convenience thing – pay at the pump. But are you aware of what happens behind the scene? Are you aware that you are potentially freezing money in your account while the gas station and the bank “settle up”? What happens is your checking account balance is struggling?
When you drive up to the pump and insert your debit card into the reader, a connection to your bank is made that validates you having money in your account. If you have money – great! The problem is no one knows how much you are going to spend there at that pump. An agreed to amount is then placed on your account, assuming you have that much there, and it is locked or frozen until the account is properly debited for the final amount. That could be 1-3 days. If things are tight in your account then… you now see the picture.
Here is an example. You insert your card into the reader and your account is now locked for $80. You pump your gas and the final amount is $42. Since the locked amount is $80 and you only spent $42 you should then have the remaining $38 back to your credit in your account. You will, but it may take 1-3 dys for that to happen.
Your bank account is tight? With this scenario you could bounce some checks. You could be prevented from another debit card purchase that you want to make in that window. See the picture?
How do you avoid? First, you can pay cash. Yes, they still take cash and will gladly due so. Some stations offer a conveience card that allows you to delay going inside until you have finished pumping. Use the card to initiate the pump and they know, now, who you are and who to come after if you “forget” to pay.
Second, use a debit card. You can use the convenience card (if one exists) or you can go in and tell the attendant how much you want to pump before you pump your fuel. With this transaction, your bank knows exactly what you spent and there is no lock or freeze on your account.
While I specifically address debit cards here, the same is true of prepaid credit or gift cards in most cases.