A warning about credit card “holds” when you rent a car

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By | March 23rd, 2016

When Perry Capurro rented a car from Hertz in Harrisburg, Pa., recently, he got an early surprise: a required $200 “authorization” on the reservation.

“They were difficult to deal with the whole time, and they do not release the hold until midnight,” he says.

So what’s with the “hold”?

Actually, the requirement is disclosed in the rental agreement.

Credit Qualifications/Requirements: To qualify to rent the Hertz vehicle, the renter must present at the time of rental a current driver’s license and valid major credit card or debit card (see Debit Card Usage below) in the renter’s own name with available credit. At the time of rental, an authorization hold will be secured on the credit/debit card provided, to cover the estimated rental charges and any additional charges that may be incurred. These funds will not be available for your use. For customers with a PC coupon, the estimated amount is the approximate total not including your promotion.*

*We may place an authorization amount of up to USD 200.00 plus the estimated charges on a customer’s card, given certain conditions that will be outlined at time of rental.

Here’s the problem: I went through the Hertz booking process to see at what point it revealed the charge. You have to go through four booking screens and then click on the rental terms, then choose “form of payment” to hear about the $200 hold.

I think that’s why Capurro is upset.


“Tell Hertz they need to disclose to customers making reservations and confirmations that there will be a $200 authorization hold on their credit cards,” he says. “They pull bait and switch tactics and do not tell the consumer until you are at the counter to get your car.”

Related story:   "This is not what we had signed up for"

Car rental companies aren’t the only travel businesses that place “holds” on your card. Hotels do it, too. I’ve heard the reasons why, but they don’t make any sense to me. To me, these “holds” look like unnecessary money games. The fact that they’re poorly disclosed makes them look even more nefarious.

Capurro is lucky. Some “holds” can take days or weeks to clear. A few years ago, a hotel in New York preauthorized my card for several hundred dollars. It took an entire week to clear. It was awkward. I was in town to shoot a segment for ABC News, and they had agreed to cover my hotel. The preauth made it look as if they’d charged me the full rate. I made several nervous calls to their accounting department before figuring out that this was just a credit card “hold.”

Credit card preauthorizations make no sense if you’re a consumer. It’s taking money before you receive the product and pay the bill. I’m not surprised car rental companies like Hertz note the preauth as an “oh-by-the-way” four screens and two clicks into the reservation process.

But let me be clear: A preauth can ruin your day because it decreases or eliminates your available credit. Often, you don’t find out about the “hold” problem until you’re trying to buy dinner for your family, and you realize that you don’t have the available funds.



  • Ben

    This is not the quality of article I expect from you, Chris.

    For one, Perry’s experience is very clearly not a bait and switch. You do consumer advocation a disservice when you misuse that phrase, which has a very clear legal and practical definition.

    Secondly, holds make perfect sense. They’re not going to get paid until later so they want to make sure you’re good for it. Even if the hotel is pre-paid they want to make sure you have the funds to cover any incidental expenses so they don’t get stuck holding the bag when you raid the minibar and dash.

    Thirdly, credit card holds are a good thing. They serve the same function as security deposits but with far less hassle for everyone involved and less risk for consumers. You’re stigmatizing something that is good for travelers.

    Anyone who has traveled before should expect holds on a variety of services and for 99.5% of travelers this isn’t a problem. Bringing them to the attention of less-savvy consumers is a good thing, but an article demonizing them? Not worthy of being published on this site.

  • Jeff W.

    I have seen additional warnings, especially at rental car counters, regarding the use of debit cards when making such purchases. If you use a debit card, the cash is actually taken from you in some cases and then returned upon return of the car.

    This should not be a surprise to anyone. The hotel/car rental company wants to make sure you can pay.

  • polexia_rogue

    This is not news-EVERY car rental dealer does this. and for me (as long as you use a CREDIT card) it’s cleared 24 hours after I drop off the car/exit the hotel.

    DEBIT cards are a different story. those are not a hold but an actual CHARGE (which is why so many places prefer/will only accept credit cards) those are what can take weeks.

  • Peter Varhol

    I don’t think I’ve ever had a hold on a credit card for a rental car (sometimes they don’t even ask for one). I’m fortunate enough to have ample funds available, and would probably never notice it.
    Of course, the other side is that they may not have the type of car you had reserved. Thanks to a Delta glitch a couple of months ago, I arrived at ILM several hours after my stated time. The Thrifty guy said, “I only have two cars left.” Then he looked at me. “I’d rather give the $70K Lexus SUV to you than some 25-year old.”
    Who says being old doesn’t have its benefits?

  • pmcw

    There is a need for a credit card hold in some transactions. However, there are also opportunities for abuse. Abuse comes in the form of unreasonably high hold amounts (I don’t think $200 is too high for a rental car – they are trusting you with tens of thousands in value), and keeping the funds an unreasonable length of time (24-hours is plenty in virtually all transactions).
    One reason we’re seeing abuse here is the value of the money float (the time the company holds the funds). Let’s say you are a large company like Hertz and at any given moment you have one million cars rented; each with an average hold of $200. That means you get the consistent average daily benefit of $200 million. Even at 1% interest, that provides $2 million in annual profit. While this value is diminished by the persistently low interest rates we see today, publicly traded companies also receive a balance sheet benefit from average daily float. While there would be an offsetting liability, the average daily float of holds is shown as a current cash asset.
    So, at the bottom line, we should not push to abolish holds, but it is reasonable to push for better disclosure and a formula for establishing limits for the amount held.

  • Ben

    The company doesn’t get any money from a preauthorization, there’s no float benefit.

  • Pat

    Hotels and car rental companies have every right to place holds at an amount slightly higher than what the expected bill is going to be. They need to make sure you have the money to pay the bill when you checkout of the hotel or drop off the car rental. The one issue with holds is in some cases, the bank / credit card company fails to connect the hold to the actual charge in order to release the hold. But that issue does not over ride the issue that without holds, hotels and car rental companies would get stiffed with customers unable to pay their bill a lot more.

  • John Baker

    1. Pre-authorizations don’t “take money” all they do is reserve a piece of your credit limit for a future payment. A number of online retailers do the same thing (hold when you hit buy. Charge when you ship) and your local gas pump does it too (they need to make sure that you can pay before you pump your gas). They just happen quickly enough that most people don’t realize it.
    2. The current system is far better than charging a deposit and refunding it which would be the other option.

  • Tom McShane

    A young person would WANT a Lexus?

  • Zod

    I find it surprising that the hold would affect someone to the point where they would notice it. Are that many people that close to their credit limit that a measly $200 would be a problem? I think THIS would make a better story. “How do people go on vacations with less than $200 of available credit”

  • MarkKelling

    A credit card hold is not a “fee”. No money moves on the hold so no one gets any interest float. A hold is a way for the company to determine if you have enough available credit (or funds in your debit account) to cover the possible cost of your transaction. Money is NOT moved on a debit card hold, it is simply removed from your available balance and is not available for withdrawal until the hold expires (your bank may show this differently in your account statement). But you should not be using a debit card for travel expenses anyway.

    Restaurants do the hold thing too. They authorize your full meal price plus 25% to 30% so when you tip the money is already reserved and they don’t have to do a separate transaction to get the tip money. Gas stations do a $150 authorization (left over from when gas was pushing $5 a gallon here in the states) before you pump a single drop.

    All of these holds automatically expire after a given amount of time, some quicker than others. If the merchant is doing it right, the hold is expired immediately when the transaction is finalized. If they are not doing it right, you can see the posted transaction on your account plus the authorization for a period of time.

    Before the internet and banking apps and real time email messages from your card issuer, this was never a problem. Holds have always been done on credit cards, you just didn’t know about them because they never showed up on your monthly statement because they were not really transactions that needed to be reported.

    If you are that close to your credit limit that a $200 or so hold on the account prevents you from paying for other things, maybe it is time to re-examine your financial situation and work on getting your credit card balance down to a more reasonable level.

  • Morgan Greywolf

    I think what Chris is talking about here is that many people are simply unaware that the holds are occurring at all. Many travelers will never even notice the holds and hotels and car rental agencies often either don’t disclose them upfront or, in some cases, they don’t disclose them at all. In many cases, the amount is also never disclosed. The fact that the holds can take a week or longer can to clear can be a real problem for some folks on a strict budget or fixed income.

  • Chris Johnson

    I don’t necessarily like the idea of a credit card pre-authorization either, but what is the alternative? Pay for your car rental and/or hotel stay entirely up front? Leave some kind of collateral until the trip is over and the transactions completed? If someone has a better idea, I’m listening but I really don’t see a choice in this matter.

  • Morgan Greywolf

    It does if it holds against a debit card.

  • Morgan Greywolf

    Pre-authorizations _do_ take money if the customer uses a debit card.

  • Ben

    From the merchant processor’s point of view those are usually pre-authorizations, too. It just looks different to the consumer.

  • William Leeper

    Actually no, even on a debit card, the money is not released to the merchant until the pre authorization is cleared, and that doesn’t happen until return. The money is still held by your bank, and is still in your account, it is still a part of your “ledger balance” however it is removed from your “available balance.” the money is never released to the merchant upfront, simply an authorization number that the merchant can then act on later.

  • William Leeper

    See my reply above, and you might also visit our credit card processing FAQ. I have it all explained there. You can find the FAQ by visiting http://elliott.org/frequently-asked-questions-about-credit-card-processing/

  • Pat

    Pre-authorizations or holds do reduce the amount you have available to spend using your debit card, but the money is not transferred to the merchant at that point. So the money is still in your account, it is just that you cannot touch it. With my bank, it will show as pending and my current balance will include all pending transactions with the available balance less any pending transactions.

  • Annie M

    Wish you had a choice other than yes or no. I think a hold is fine for one day. It’s not fine for any longer than that. But you should also warn the public against using a debit card for car rentals and hotels. The hold process is even worse on a debit card.

  • Nancy

    This happened to me with a debit card! I was traveling on business last year and renting a car. At the rental counter picking up the car, the company claimed that my business credit card didn’t go through for the rental charge. I don’t have a personal card due to a personal bankruptcy a few years ago. I was forced to give them my debit card. They insisted on taking a SIX HUNDRED DOLLAR deposit – not a hold, an actually deduction from the account – as some sort of penalty for using the debit card! Thank goodness I had it in the account!

    The real kicker was that of course I immediately called my credit card company to find out what was wrong because it appeared that I may have been the victim of fraud and was stuck out of town with no credit card. They told me that they had no record of a charge attempt by the car rental agency, let alone a decline. I believe the agency, which I found out later has an extremely bad reputation in that particular franchise location for fraud, forced me to use the debit card so they could sit on my cash and earn interest on it (and lower their transaction fees – double win for them). If they did that to a lot of people, it could really add up at an airport rental location.

  • RightNow9435

    In my case one time in London(I am an American), I rented a car and they took not a hold, but a deposit of 3000 Pounds, on a regular charge slip. Then when I brought the car back, they gave me a debit charge of 3000 Pounds….and BOTH of them went thru on my credit card.
    In other words, I was forced to “speculate” in the foreign exchange market for the 2 weeks I had the car. I was lucky, and gained approx $28 from it, but could have lost hundreds if the dollar took a tumble.
    Needless to say, I never rented from that company again on future trips to London

  • Mark

    I’ve been in a hotel where a guest was wanting to pay the bill in cash – so they asked him for a cash deposit equivalent in value to the ‘hold’ charge.

    A credit card hold is much, much easier.

  • C Schwartz

    I have been told about the holds every time and have been told it is usually to cover the fuel if someone leaves the car with an empty tank. Maybe I have been lucky with counter employees.

  • MarkKelling

    But what if you rent a car or stay in a hotel for a full week or longer? If the hold is only for 24 hours, the funds may not be there at the end of the week to cover the actual charges. The hold is OK as long as it expires when the transaction is completed (you return the car or check out of the hotel) and is how this works in most cases.

  • MarkKelling

    An authorization is just that — it authorizes the requested amount to be held for later payment to the merchant when a transaction completion request is sent through the system. In a debit account, the funds do disappear from your available balance, but it is your bank holding those funds not ever the merchant who requested the authorization.

  • Mark

    How close to the edge does this guy live? If a $200 credit card hold is going to break his limit, he should be taking the bus.

    But if it’s a debit card, that’s real money and his frustration is a little more understandable.

  • AAGK

    This hold nonsense is one of the most absurd concepts. I have checked out of hotels with the entire folio reconciled, paid and posted on my card and a second charge for nearly the same amount remain pending for a week. While I am used to it now and plan accordingly, it is still ridiculous and can send someone into a panic.

  • AAGK

    This is not how holds work. It is one thing to have a copy of the card while you are a hotel guest. Once you check out and the hotel has receive its funds, there is absolutely no reason to hold thousands of dollars for an additional week. Do they think someone will sneak back into the room and raid the mini bar?

  • Chris Johnson

    Agreed. When I was a freshman in college and went on spring break, everything paid in cash except for the plane ticket, it was a huge pain and took away from the trip’s enjoyment.

  • KanExplore

    I think the real issue is not the hold itself, which is quite valid, but the prompt end of it when the transaction is completed.

  • Morgan Greywolf

    When it comes to car rentals, generally they have told me and have given me the amount, but not always. And I’ve actually seen holds appear on my account for hotels and hotel clerks almost *never* disclose the holds.

  • Mel65

    The werdest credit card thing that ever happened to us was when I was buying 5 tickets to Hawaii. I went to use my CC a couple days later and had no credit available and I was stunned. The tickets were right at $5K so I should have had another 5K available. When I called, I was told that the tickets were charged individually at 1K each but that a separate 5K charge was also pending and that it would “fall off”. It did but it took about a week. I’ve never figured out why they’d charge me for the tickets indivdiually and as a whole like that.

  • Mel65

    Yeah I’m okay with a hold for the amount of the rental, to be processed at the end of the rental OR with them charging the rental ahead of time. If the rental prices is $200 for the week, then it’s legit for them to ensure they’ll get that by preauthoritzing it at the beginning, but preauth THAT amount PLUS a “if you screw it up” hold is irritating. It’s like saying “We’re pretty sure we’ll be charging you for a ding or scratch so we’re setting it up now”!!

  • Mel65

    I don’t hate preauthorizations. As long as it’s the amount I’m going to owe at the end of the stay/rental/whatever, it’s really no big deal. It’s the additional holds/authorizations they post to cover “incidental/damage/etc” that I find irritating.

  • Mel65

    They do not “take” money. They simply put a “dibs” on it! So that it will show pending and unavailable for use until it IS taken or the auth falls off.

  • S363

    I’ve long been aware of various holds, as I check my card info online frequently, and I’ve never had a problem with them. But then I’m a responsible adult who pays my card off each month and I therefore have available credit of $5000 (or usually rather more) at any given time. As for using debit cards for such things, numerous discussions on here and many other places have explained why that’s a very bad idea. In fact I think it’s probably a bad idea to use a debit card for anything.

  • PolishKnightUSA

    It’s an annoyance. I have a friend in a similar situation and he has a debit card and has to deal with these types of huge deposit issues.

    All that said, and I have to sympathize with the companies here, if someone has bad credit and barely 600 in their bank account, isn’t that a risk to loan them a car worth 20 grand or more?

    Of course, as someone who knows the law, actually the best person to loan something to is someone who has just declared bankruptcy. They can’t declare it again for 7 years and they usually have clean records after that.

  • PolishKnightUSA

    I remember a crime story on TV about some business cat burglars that had a system: They’d fly into town on a small plane, rent a car, and then swoop in and burgle diamond and jewelry stores. They had it down to a science where they would use cell phone jammers and cut the phone lines so the burglar alarm wouldn’t work and then a safe cracker would make off with everything. They’d then fly out of town and sell the jewelry to pawn shops in other states.

    They got busted, partly, because when one of the guys returned a car, apparently it was low on gas and the rental agency hit them with the super expensive refill charge. That remained somehow in a special record that didn’t get wiped with the other aspect of the transaction allowing the cops to swoop in on them.

  • PolishKnightUSA

    When my wife got her first credit card, it was only for $500 or so. Not a lot. She wasn’t a huge risk but since it was her first card, they kept the amount low.

    So when the rental agency would demand someone like her pay for a car, they’ll want it on the card so if the charge is $325 for the week, that would only leave $175 free. This is moot, of course, since I rented the car on my card.

    Back when I had a low liimit card, I used to pay it off frequently if necessary. If I bought something, I paid it off a few days after it posted to keep the balance low. The card issuer noticed this and was impressed and automatically raised my limit quite quickly.

    My friend with a debit card, even with his awful credit, could still work his way up. If he get a department store card, even one that is limited to that particular store, I found they often migrate the customer over to a standard visa/mastercard.

  • Nancy

    I understand why a company would insist on a higher deposit from someone using a debit card. What I take exception with is the company I rented from scamming me into using my debit card by pretending that my perfectly good credit card was declined because it was financially beneficial for them to use the debit card instead.

    I take serious offense, however, at the suggestion that a person is somehow more dishonest because they aren’t financially secure. Many, many people these days have bad credit for reasons beyond their control, such as medical debt, or job loss (especially with the recent recession). It doesn’t make us thieves.

  • PolishKnightUSA

    I know and that’s why I went into how technically, many people who have gone through bankruptcy are probably better credit risks.

    Do you think they were scamming you with the claim your credit card didn’t go through? The reason is that I personally don’t have a debit card, at all, so if they pulled that on me, I’d have to walk.

  • Nancy

    By “responsible adult” what you really mean is “lucky enough to have all the money I need”. When I travel for business for clients, I can incur large credit card charges for billable expenses and it can be 60 days before those invoices are paid due to corporate accounting practices. I usually do not have the cash to pay those off while waiting for the invoices to be paid. Newsflash: it’s not a character defect to have to carry a credit card balance sometimes.

  • Nancy

    I spoke to my credit card company, concerned that my credit card was the victim of fraud because I knew what the balance was supposed to be on it. They told me they had no record of a transaction attempt or decline on it from the car rental agency. I trust them more than the rental agency, whose online reviews for that franchise location are filled with horrible fraud stories. I believe that they deliberately forced me to the debit card to lower their transaction fees on an expensive rental. If they did that to a lot of people, at an airport rental location? It could add up to a lot of money in the rental agency’s pocket by cutting their expenses 1%.

  • Tricia K

    Up until recently, I’ve never had an actual hold put on my credit card for a car rental or hotel room.If the room is pre-paid, they have asked for a credit card to cover incidentals, but have never actually charged the card. In late February, we stayed at a hotel in Manhattan that didn’t say anything about the hold until we were checking in. I think it was $100-200 for the weekend and they told me they would charge it to my credit card and refund it about a week after we checked out if there were no other charges. I’m not sure why this hotel did it this way though, because unlike most hotels these days, you actually had to go to the desk to check out and sign a paper for the charges before checking out. I guess I have mixed feelings about the hold itself, thinking about family members who don’t have large credit limits (if at all, due to financial difficulties), especially when they have to travel for something like a funeral and don’t really have a choice. I think I would be ok with it if it were made clear at the time of the reservation so you could plan accordingly, but someone with a small credit limit could be in trouble if the car rental and hotel put holds on the card — they either wouldn’t be able to use the card for any other expenses and possibly even face fees for exceeding their credit limit (although in these days of almost instant transaction times, I have an issue with a card company being allowed to charge for that).

  • jim6555

    Back in November, I rented a car from Fox Rent-A-Car at LAX. They told me up front that there would be a $150 hold put on my card. I returned the car the following week and was told that the hold would be released immediately. Their van transported me to the airport. I checked in, went through the TSA line and took a seat near my gate. I had some time to kill before the flight departed and decided to use my phone to look at my credit card account. I was surprised to see that the $150 hold had been removed. If Fox can quickly remove a hold in a very short time , then all travel companies should be required to remove holds within minutes of the close of the transaction.

  • AAGK

    Amazing point! I agree.

  • Carrie

    The info regarding holds needs to be given upfront by the hotel, rental car company etc…

  • cscasi

    I normally have a small hold put on whatever credit card I use for my hotel stays. But, I have NEVER had “thousands” of dollars put on hold on my credit card. Usually it is $50 or $100, in case I use the minibar or some other extras. And, the hold normally disappears within a day or two because the hotel charge appears on the credit card account.

  • cscasi

    I would have called the credit card company, suing the number on the back of your card and find out if it declined your card or not. If it did, why. I know what limits I have on my cards. Seldom is my card declined. If it is, it is usually because the fraud department got an alert and it wants to make sure it is me using the card and that everything is OK. Then, it opens the card again. I have only had this happen twice in the past five or six years. But, I am thankful the banks are looking out for me.

  • cscasi

    ” The fact that the holds can take a week or longer can to clear can be a real problem for some folks on a strict budget or fixed income.”
    I understand your thought, but knowing that this is normal business practice, I would think people renting or staying in a hotel would not use a credit card which is just about maxed out – where putting a $100 or so hold would run it to its limit. If it was several hundred dollars, I could understand. Still, people need to be aware that holds are placed when they rent a car or stay at a hotel and they can always ask up front what the hold will be.

  • TMMao

    It’s a two-way agreement. The hotel can waive the additional hold if you choose at check-in to not charge anything else to the room account beyond the room rate + taxes. Oh, and also sign a personal responsibility notice that they can collect from you for any damage or theft from the room.

  • TMMao

    When that happens, a quick call to your credit card company will waive any foreign exchange losses (or gains)

  • TMMao

    Again, how will the car rental agency be reimbursed if you return it less than full, or cause damage? Without an authorization hold, they will have to send it to collections and I’m sure that wouldn’t be a nicer solution.

  • TMMao

    Here is the reason it happens, if you have a few minutes to read this:

    Guest has a reservation for 3 nights at $100 + 10% tax per night.
    – guest checks in, authorization hold of $330 is placed; approval # 101 is issued by credit card company
    – day 2, guest runs up $40 in room charges, additional authorization hold of $40 is placed; approval # 102 is issued by c/c
    – day 3, guest charges another $60 to room, addt’l auth hold of $60 is placed; approval # 103 is issued
    – day 4, guest checks out; $430 is charged to credit card using approval #101
    That leaves $100 in authorization holds still outstanding after checkout. These will automatically expire in 3-7 business days but until then, the guest cannot access that credit (or debit) limit.

    In circumstances where it is urgent to access the credit limit locked by the authorization hold, the hotel can phone the guest’s card issuer directly and request release of the holds by providing the approval #s, i.e. #102 for $40 and #103 for $60.

    Hotels did not create this system, the credit card companies did. If anybody can come up with a better way, we’re all ears.

  • TMMao

    Your ticket issuer took a short cut to get the proper approval codes by creating five new transactions. What they should have done was charge the first $1K ticket using the approval code for the $5K authorization hold. That would have released the $5K hold immediately.

  • TMMao

    What Fox did was actually process a charge to your card for $150, and then process a refund at the end of the rental. This is different from an authorization hold in which no funds are moved.

    There is a hidden benefit to what Fox does if you also have the AMEX premium car rental insurance plan (which automatically charges $25/mth every time you rent a car using the AX card.) Put the $150 rental deposit on the AX card, and if you return the vehicle without any damage, pay for the rental using another method; AX will automatically refund the $25 fee after the $150 deposit is returned. That’s like getting free damage waiver insurance.

  • Ben

    I do not work for the travel industry. Perhaps you can explain how a temporary pre-authorization that most consumers never even notice is a rip-off?

  • Jake S

    I think that the amount of the hold depends on the details of your car rental contract. That’s probably one of the reasons why the exact amount is disclosed on the last screen of the process.

    I’ve stayed at a major chain hotel in China once, where the hold amount was 100% of the booking price. One of my colleagues was not prepared for that, and I had to use own card to give him a peace of mind. Some hotels, like Four Seasons, can actually charge your card a security deposit, which is refunded in a separate transaction (or added to your Four Seasons account) at the end of your stay.