The process where a certain amount of money is reserved on a cardholder's account before the final transaction occurs.
You make a purchase but don't see the final charge appear immediately. What gives? The delay may stem from a preauthorization on your account. Learning how preauthorizations work can help consumers better track transactions.
A preauthorization places a temporary hold on funds when a final transaction amount is unknown. Hotels, gas stations, and restaurants often preauthorize cards to reserve funds for pending purchases.
Preauthorizations verify sufficient available credit or balance for the expected order total. The hold remains in place until the actual charge occurs after service delivery.
Preauthorizations create flexibility because merchants don't have to guess order totals. Holds typically process for the estimated amount or a small buffer percentage.
Once the final transaction goes through, the preauth hold drops off. The timeframes depend on the merchant's billing cycle - hours, days, or weeks later.
Preauth holds may exceed final charges. While merchants release excess holds after finalizing the transaction, delays can tie up funds.
Consumers should track preauths by:
Properly managed, preauthorizations allow seamless payments while protecting buyers and sellers.
Preauthorizations indicate a payment is imminent. While they limit account access temporarily, preauths enable smooth, accurate order completion. By making sense of these pending promises to pay, consumers can follow transaction flows intelligently.