Debit Card Traps - Part II

Susan, a good friend of mine, recently called me in tears. She and her family had planned a getaway to Disney World for a long holiday weekend - the first "vacation" they had taken in years. The kids had already planned out which rides they were going to go on, and Susan and her husband were eager to get away from it all for a few days.

Always the conscientious one, Susan made it a point to pay her bills online the evening before heading off for vacation. She booked her hotel online as well, using her debit card. But on the second day of the vacation, she was shocked to learn that her checking account was overdrawn, and that overdraft fees were piling up daily.

Susan learned that the hotel had put a "hold" on her debit card for the entire amount of the hotel bill - effectively blocking all of her available funds in her bank account. This caused her other bill payments to be returned for insufficient funds, adding more fees to the total. And, she had no access to the money in her bank account for purchases until the hold was lifted - after her stay was over.

Whether reserving a hotel room, renting a car, starting a tab at a bar or even purchasing gas, many retailers are using holds to ensure patrons pay their bills. While these holds are usually lifted within five business days or less, being unable to access the funds in your account due to these types of blocks can be stressful and expensive.

The lesson? If you are traveling, use a credit card to reserve hotel rooms, rent cars or make dinner reservations at restaurants. If you must use your debit card at places such as a gas station pump, enter in your PIN number - doing so eliminates the hold.