ATM & Debit Card Preauthorization Holds
To help reduce check fraud, scams and identity theft, FORUM Credit Union places holds on all deposits greater than $300 made at ATMs. Most financial institutions have placed holds on ATM deposits for years, and due to increasing fraud FORUM Credit Union is now implementing holds to protect our members and prevent credit union losses. Deposits made at an ATM will be available on the second business day after the deposit allowing time for deposit verification and collection of funds (members will be notified if longer holds are necessary). However, the first $300 of the deposit is made available immediately. Example: You deposit $450 – a hold will be placed on $150 for two business days and $300 will be immediately available. Also, this hold policy applies to both cash and check deposits as the ATM cannot distinguish the difference between the two.
Debit Card Preauthorization Holds
In conjunction with new Federal regulations; FORUM places preauthorization holds on transactions performed with your debit card when processed as a “credit” or MasterCard type purchase. (This does not include PIN-based “debit” transactions.) Since these transactions do not post to your account immediately, funds in the amount of the purchase will be placed on hold in your checking account. This is a way of reserving those funds in your account for the debit card purchase. Most holds are removed automatically when the transaction posts to your account – usually within one or two days. In the event a hold is not removed automatically when the transaction posts, it will automatically drop off 72 hours from the time of the original transaction.
Full account information, including funds on hold and your available balance are displayed within your account in CU Online, FORUM Credit Union’s home banking site. If you are not currently using CU Online, we encourage you to begin utilizing this free service as the most accurate way of managing your account and receiving account alerts, such as balance information.
See below for answers to frequently asked questions. If you have further questions regarding these changes, please contact the credit union. Thank you for being a FORUM member, we look forward to continuing to serve your financial needs.
MasterCard® Debit Card Preauthorization Hold FAQs:
What is a MasterCard® Debit Card preauthorization hold?
When you use your MasterCard® Debit Card to conduct a credit transaction (you do not enter your PIN), the merchant sends us the amount, usually your purchase total, for preauthorization. This amount is placed on hold and removed from your available balance immediately. Holds are typically released when the transaction clears your account or within 72 hours from the original transaction time, whichever comes first. The hold helps reflect the most current available balance on your account through FORUM’s CU Online, Tellerphone Banking, CU Online Alerts and at ATMs.
Will MasterCard® Debit Card preauthorization holds apply to all of my purchases?
No, they only apply to MasterCard® Debit Card purchases when you sign your name or do not enter a PIN. Debit card purchases and ATM withdraws made using a PIN subtract the funds immediately from your account, thereby reflecting an accurate available balance.
What is the difference between my actual balance and my available balance?
Your available balance reflects any preauthorization/deposit/check holds, etc. and is used to determine available funds for future transactions on your account. If funds are not sufficient in the available balance at the time a transaction clears, an overdraft or NSF fee is charged for each transaction that attempts to post. Likewise, if there are not sufficient funds in the available balance at the time of new ATM or debit card authorizations, the transactions could be declined. If you have opted-in for Overdraft Privilege coverage on ATM and everyday debit card transactions, your transactions may still be authorized for a fee. If you have questions about your overdraft coverage, please contact the credit union.
The balance we use internally as transactions clear is called your current balance and includes all items that have cleared the account up to that point. This current balance does not include outstanding debit card purchases, share drafts (checks), or automatic drafts (ACH).
Why is FORUM Credit Union implementing MasterCard® Debit Card preauthorization holds? Won’t that mean less money for me?
Unlike PIN-based transactions which post immediately, signature-based debit card purchases are a two-step process, consisting of an authorization and a settlement. When your card is swiped for authorization at a merchant, it is verifying that your account is valid and funds are available for the cost of the transaction. At this point, funds are "held" and deducted from your available balance but are not yet removed from your account. Usually, within one or two days, the settlement transaction is received and funds are deducted from your account and transferred to the merchant. At this time, the original hold is usually removed.
Most members depend on the accuracy of their available balances to help them avoid NSF or Overdraft Privilege situations and associated fees. MasterCard® Debit Card preauthorization holds allow members to view pending transactions and provide timely available balance information.
John visits the ATM and sees his available checking balance is $100, so he withdraws $50. He doesn’t realize his wife made a MasterCard® Debit Card signature purchase for $75 from their joint account earlier in the day. The resulting balance in their account would be negative when the debit transaction arrives for processing, so their overdraft protection is triggered to transfer $25.
However, if FORUM had placed a Debit Card preauthorization hold for his wife’s $75 transaction, John would have known that he really only had $25 available to him and could have avoided the NSF situation by withdrawing less money.
Is FORUM Credit Union implementing MasterCard® Debit Card preauthorization holds to generate more overdraft fees?
No. In fact, we believe this feature provides the information needed to help members avoid overdraft situations and thereby avoid Overdraft Privilege or NSF fees.
The advantage of preauthorization holds is that you can check your balance and get a more accurate picture of what is truly available to you before you spend. Note: Overdraft Privilege situations may still occur depending on your opt-in status for ATM and everyday debit card transactions. Please contact the credit union if you have questions about your Overdraft Privilege settings.
How will I know if a MasterCard® Debit Card preauthorization hold has been placed?
Your preauthorized debit transactions as well as check, deposit and other holds are displayed within CU Online. On your main balances page, the available balance will appear as a hyperlink if it is different than your current balance. Within account history, your current balance, available balance and funds on hold appear at the top of the page. The Funds on Hold will also be a hyperlink. Clicking either link will take you to a holds page displaying a breakdown of any existing holds on your account. You can also obtain your available balance through FORUM’s Tellerphone banking and at ATMs.
In addition, you may sign up for an Account Balance Alert in CU Online to notify you via email of your account balances on a daily basis.
Will the MasterCard® Debit Card preauthorization hold always equal the exact amount of my transaction?
No. Some merchants such as gas stations, hotels, car/truck rental agencies and restaurants, may preauthorize an amount that is higher or lower than the actual purchase amount. For example:
Gas stations: Most automated gas pumps preauthorize transactions for amounts ranging from $1 for “Credit” transactions to $75 or $100 for “Debit (PIN)” transactions because they do not know how much gas you will pump in advance of your transaction. If you select “Debit” at the pump and they preauthorize $75, we will validate funds in this amount are available and place a hold for $75. At the completion of your purchase, the amount of the actual transaction will post immediately and release the $75 hold. The downside to this type of transaction is that you may not have $75 available in your account at the time. You may have $50 with the intention of purchasing $20 in gas, however due to the “Debit” process used by automated gas pumps; your transaction would be declined. By contrast, if you select “Credit” at the pump, the merchant typically sends through a preauthorization in the amount of $1. This authorization is simply to ensure the card is valid. When the settlement posts in one or two days, it will clear your account for the amount purchased and release the $1 hold.
Hotels and rental car/truck companies may obtain multiple preauthorizations on your card for a single transaction resulting in varied holds against the available balance in your account. Example:
Hotels: When using a MasterCard® Debit Card to make reservations in advance, hotels will generally preauthorize an amount equal to an overnight stay, or more, depending on the length of your stay. This will result in a hold on your account up to 72 hours affecting the available balance in your account. Then, when you actually arrive, the hotel may obtain a new preauthorization. The amount can be unpredictable and is often larger than the cost of your stay to cover possible incidental expenses such as room service charges, etc.
Because these can result in significant holds against your checking account, we recommend always using a credit card rather than your MasterCard® Debit Card for hotel and car/truck rental transactions. Another option would be to use a credit card for the initial reservation, then use your debit card when you check out or complete the transaction.
When I make a purchase online or by phone using my MasterCard® Debit Card, is it processed as a credit or debit transaction?
Online and telephone MasterCard® Debit Card transactions are processed as credit transactions because you do not have the option to enter your PIN. These types of purchases will create a preauthorization hold.
If you place a hold on my account and then the transaction comes in, is there a chance you’ll subtract it again?
When merchants preauthorize an amount that is different from the final transaction total, it’s possible that the hold will not release. However, we’ve found that most holds match off to the final transaction regardless of whether the preauthorized and settlement amounts match. In the event a hold is not matched off, it will automatically be released 72 hours from the time it was placed.
Do all MasterCard® Debit Card transactions clear within 72 hours?
No. Some merchants will not process their settlements in time to reach us within the 72-hour time frame of the hold. In that case, the hold will expire and drop off automatically. Those funds will become available again; however, the transaction still has to clear your account. Please ensure sufficient funds are available in your account to cover your outstanding debit card transactions. Unfortunately, we have no control over how quickly merchants process their transactions.
Why did my account get charged an overdraft fee when my balance wasn’t negative?
Preauthorization holds affect the availability of funds to cover checks drawn on your account as well as other withdrawals such as ACH transactions. Your account history reflects the current balance, not the available balance. Fees are charged when funds are not available in the account when transactions post. If there are not adequate available funds to pay a transaction, applicable Overdraft or NSF fees will occur.
It remains very important to keep records of all payments you’ve authorized from your account. Preauthorization holds will help track your debit card purchases and reserve the funds before they post to your account. However, we have no record of outstanding checks or ACH transactions you’ve authorized.
Also, depending on your Overdraft Privilege settings, your Debit card purchases may have been authorized based on available Overdraft Privilege funds. If this is the case, you will be charged our standard overdraft fees when that transaction posts to your account. Please contact the credit union if you have questions about your Overdraft Privilege settings.
Can I set up overdraft transfer protection to help avoid fees?
It is always a good idea to have overdraft transfer protection set up on your account. Overdraft transfer protection helps you avoid larger Overdraft Privilege fees by using your Savings Account or Line of Credit loan to automatically cover the insufficient funds.
When you open a FORUM Credit Union checking account, your Savings account is automatically established as the primary overdraft account, but you may also use a Line of Credit loan as well. Please contact us via online chat for more details.
Can MasterCard® Debit Card preauthorization holds on my debit card be removed?
It is not our policy to remove MasterCard® Debit Card preauthorization holds unless an error was made. If an erroneous hold was placed, or there are extenuating circumstances, please contact us.