How to Pre Authorize a Credit Card: A Complete Guide
In the world of credit cards, pre-authorization plays a significant role in various transactions. From hotel reservations to rental car bookings, pre-authorization ensures that funds are available on a credit card before a purchase is made. If you’re unfamiliar with this process, fear not! This article will guide you through the steps of pre-authorizing a credit card and answer some frequently asked questions to clear any doubts you may have.
What is Pre Authorization?
Pre-authorization is a temporary hold placed on a credit card to confirm that sufficient funds are available for a transaction. It is a common practice for businesses that provide services before the final payment is made, such as hotels, rental car companies, and restaurants. The pre-authorization amount is typically a percentage of the total expected charge or a fixed amount agreed upon by the business and the credit card issuer.
How does Pre Authorization work?
When you provide your credit card details for a pre-authorization, the business contacts your credit card issuer to check the availability of funds. The issuer places a temporary hold on the specified amount, which is deducted from your available credit limit. This hold ensures that the funds required for the transaction are reserved and cannot be spent elsewhere. Once the transaction is finalized, the pre-authorization hold is released, and the actual charge is processed.
Steps to Pre Authorize a Credit Card:
1. Contact the business: If you plan to make a reservation or book a service, get in touch with the business directly. They will provide you with the necessary information and guide you through the pre-authorization process.
2. Provide credit card details: Once you have decided on the service or reservation, you will be asked to provide your credit card details. Ensure that you have a valid credit card and sufficient funds available for the pre-authorization.
3. Verify pre-authorization amount: The business will inform you of the pre-authorization amount or percentage, which will be temporarily held on your credit card. Make sure you are aware of this amount to avoid any surprises.
4. Confirm the transaction: Once the pre-authorization details are agreed upon, you will be asked to confirm the transaction. This step may require your consent in the form of a signature or an online authorization process.
5. Monitor your credit card statement: After the pre-authorization, keep a close eye on your credit card statement to ensure that the hold is released once the transaction is complete. If the hold remains after a reasonable time, contact the business or your credit card issuer to resolve the issue.
Q: How long does a pre-authorization hold last?
A: The duration of a pre-authorization hold varies depending on the business and the credit card issuer. It can range from a few hours to several days. However, most pre-authorization holds are released within 1-3 business days after the transaction is finalized.
Q: Can a pre-authorization hold affect my available credit limit?
A: Yes, a pre-authorization hold reduces your available credit limit temporarily. However, it is not an actual charge, and the funds will be released once the transaction is complete.
Q: Can I cancel a pre-authorization hold?
A: Unfortunately, you cannot cancel a pre-authorization hold as it is initiated by the business and authorized by your credit card issuer. However, you can contact the business or your credit card issuer to inquire about the release of the hold if the transaction is canceled or not completed.
Q: Are pre-authorization holds refundable?
A: Yes, pre-authorization holds are refundable. If the transaction is canceled or not completed, the hold will be released, and the funds will become available in your credit limit again. However, it may take a few days for the hold to be released, depending on your credit card issuer.
Q: Is pre-authorization the same as a purchase?
A: No, pre-authorization is not the same as a purchase. It is a temporary hold on funds to ensure their availability. Once the transaction is finalized, the pre-authorization hold is released, and the actual charge is processed.
In conclusion, pre-authorizing a credit card is a crucial step when making reservations or booking services. By following the steps mentioned above, you can ensure a smooth transaction and avoid any surprises. Remember to monitor your credit card statement after the pre-authorization to ensure the release of the hold. If you have any further questions or concerns, don’t hesitate to reach out to the business or your credit card issuer for assistance.