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Same Day ACH Debits – What This Means For You

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Same Day ACH Debits – What This Means For You


When using your debit card or writing a check, have you gotten used to some lag-time between the transaction and the money clearing your account?

This will be going away – for example, if you pay your cable bill by telephone in the morning, the funds could be cleared from your account before 5:00 the same day.

On September 15, the Federal Reserve will start processing same-day ACH (Automated Clearing House) debits. These can originate from your credit union transactions or if you’re shopping at your local supermarket or other retailer. Whether you choose to use your debit card or a check won’t matter, as large retailers can opt to convert checks to ACH, the same system that clears your debit transactions.

3 Tips to be Prepared

More helpful tips for Debit Card holders

What is a debit card hold?

When you use a debit card, the store clerk usually contacts the financial institution that issued your card to get an authorization. When the approval is given, the balance in your checking account is reduced or “blocked” by the amount of the purchase. This is known as a pre-authorization hold. The merchant determines the amount of the hold. The Debit Card Processor establishes the length of time the hold remains in place. Typically the hold stays on your account until the funds are transferred to the merchant from your financial institution, often 3-4 days. If you look at your account online it may show as a pending transaction.

How can a debit card hold create problems?

In a few situations, the dollar amount of the transaction is unknown when an approval is given. This may happen when you check into a hotel room, rent a car*, pay for gas at the pump or use your debit card to pay for your meal at a restaurant. In each of these transactions, the merchant may get an approval for a higher (estimated) amount– allowing for a tip, room service, additional or higher purchase amounts. Let’s say you have $60 in your account when you use your debit card to pay for gas at the pump. Since the purchase amount is unknown when you insert your card, the merchant requests an authorization for $50. The authorization causes a hold to be placed on your account for $50 and your available balance is reduced to $10. If you only purchased $20 in gas you may believe you have $40 available in your account. Unless you understand how a hold affects your account, your debit card could be declined in future transactions. This can be embarrassing and inconvenient. It could also be costly. If checks or other transactions are processed before the hold is released you may overdraw your account and incur overdraft fees.

Example of a Debit Card Transaction Hold

If you have a balance of $100 in your account and use a debit card to make a purchase at a retail store for $30, your available balance will immediately decrease to $70. This is because the merchant has obtained an authorization hold from your credit union by swiping the card through its credit card terminal. The actual balance with the credit union is still $100, because the merchant has not actually collected the funds in question. Unless this authorization hold expires without being finalized, you cannot access the held amount.

The actual balance will not be reduced until the merchant submits their batch of transactions to transfer the funds, which may take up to three business days. The best way to avoid any difficulties with debit card holds is to closely and constantly monitor your account and to read any mail from your credit union that might change the rules and regulations of card use.

How can you avoid these problems?

Tips for Debit Card Safety

*Many car rental agencies will not accept debit cards.

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