Hold On...Why Are You Using Signature Debit vs. PIN Debit?

Editors Note:  When you use a signature debit card you are not paying with cash, and you are not paying with credit.  You are paying with a hold.  But hold on.  There is a way around it.   When you use your debit card with a PIN, it is a "cash" transaction.  Funds are set aside for the real amount in real time. 

Here's an example:  If you use your signature debit card at a gas station for a $20 gas purchase, and the station could put a hold on up to $150 on your checking account.  The hold could last for as long as 72 hours. 

On the flip-side, if you use your PIN Debit card at the same gas station for the same $20 purchase, there is NO HOLD and the $20 is immediately deducted from your checking account.  Here's an article talking about Debit Holds put on by Hotels from KomoNews.com's Herb Weisbaum...

Debit cards are now more popular than credit cards. But youmay want to think twice before you use that debit card when you checkinto a hotel.  Hotels normally put a hold on your account for room and tax and something to cover incidentals -- that could be $50 day.

With a credit card, unless you're maxed out, you probably won't even notice the hold.

But with a signature debit card, that hold locks up your money.

"Soin other words, it could freeze up part of your checking accountbalance and it could make it impossible for you to make other purchasesthat you want to make if you don't have enough money in your account.,"said Gerri Detweiler with credit.com.

Detweiler says that hold can stay in place for up to 72 hours after you pay the bill.

"Youcould be tying up that credit line and then you could go to make otherpurchases in a restaurant or somewhere else and find your carddeclined. Or you could go over your limit," she said.

If youplan to use your debit card when you travel, find out about the hotel'shold policy -- and then be sure to have a little bit of pad in yourchecking account before you hit the road.

More information:

Swipe that debit card carefully: Hotel holds can tie up your money