06 April 2013

Credit and Debit Danger at the Pump!

It's a nice weekend afternoon, and you’re out there on Interstate 275 going for a weekend drive.  Somehow you take a glance at your fuel tank and that needle is slowly gliding towards ¼ of a tank.  You spy a reputable gas station at the next exit, so you exit Interstate 275 and drive on in to the gas station.
OK.  You pull up to the pump on the side where you can insert the nozzle into your tank.  Out goes your credit card, plug it into the pump reader, pump your gas and be on your way.  Whoa!  Before you plug that credit or debit card into that gas pump reader, you may want to continue reading this blog entry of the dangers you face when you use your credit or debit card at the pump.
The first danger of using your credit card at the pump reader is the authorization hold.  This is a set dollar amount that is preauthorized onto your credit card, which is released to an amount equal to your purchase when the gas station uploads their credit card transactions at a certain time of day.  Unfortunately, this type of activity is legal.
Most gas stations place a hold of around $75 – more than likely higher than that – the moment you plug that credit card into the reader.  You pump your gas and you only get $15.  What happens is that the $75 hold is deducted from your available credit until the gas station manager uploads the day’s credit card transactions to their bank.
For those of you that have extremely small credit limits on your credit cards, those authorization holds can seriously deplete your available credit despite the fact that you did not spend that money.  The end result is that when you go to make a purchase on your credit card that has that small credit limit, the card comes back declined.
You got that right, declined.
The second danger of using your credit card at the reader is that if you are using your debit card.  Debit cards – when used with your PIN number – withdraw the amount of your purchase immediately.  The major difference is that unlike a credit card where it accesses your credit line, a debit card accesses your checking account.
Most reputable gas stations allow you to use your debit card at the pump.  After you insert your debit card you are asked for your PIN.  A small authorization hold of usually $1 is placed just to be sure that your debit card is valid, unlike the large authorization holds when you use your credit card.
Now I have heard a lot of horror stories about the use of your debit card at the pump.  One major horror story is when the gas station claims that debit cards are accepted at the pump, only to find out that your debit card is run through as a credit card purchase resulting in a large $75 or more authorization hold.
What does this mean for you?  A large authorization hold for a small purchase means that a good chunk of your available checking account balance is frozen until it is released when the gas station uploads the day’s transactions to their bank.  Translation:  Your checking account is thrown into an overdrawn status, even though you only spent a small amount for gas.
Unfortunately, there are gas stations and convenience stores that want to deceive you out of your money by imposing those unreasonable authorization holds.  Their owners and store managers don’t care about you – all they care about is making more money in order to fatten their bottom line.
A third danger of using your credit card at the pump is the high danger of identity theft.  Unscrupulous individuals out there place a device onto the pump reader called a skimmer; it is for the purpose of collecting credit card numbers from unsuspecting people and using them.
So, what can you do to minimize your risk when you pay for gasoline?
First, and foremost, steer clear of gas station "pay at the pump" readers.  Go inside and tell the attendant how much you need (you can estimate if you would like) and hand the card to the attendant like you would do with a traditional credit or debit card transaction.  After your purchase is processed, you can pump what you need.
If you pump less than what you prepaid for, the attendant will give you a final receipt showing how much you actually paid.  Unlike the pump reader mega-holds, the excess amount will fall off your account much quicker.
For example, let's say you estimate that your car will take $20 worth of gas.  You go inside and the attendant sets the pump up for a $20 prepaid amount for you.  You pump the gas, and your car only takes $15.  As such, you return inside and the attendant will give you a receipt for the $15 you spent; the unused prepaid balance of $5 is released to your account much quicker.
Second, if time is a factor and you have to use a pump reader, at least use your credit card rather than a debit card.  Just take your credit limit and your available credit into consideration.
Third, if you use the pump reader, if the card reader slot doesn't look right or if it's wobbly in any way, do not use the pump reader - instead, go inside and pay the attendant on duty.  The saying is this:  If it doesn't look right don't do it.
Fourth, if you encounter a rude or otherwise discourteous attendant (including convenience store clerks) and the attendant wants you to use the pay at the pump reader, take your business elsewhere.  It is a sign that the convenience store does not care about customer service.  It is your credit and/or debit card, and you have every right to protect that card from fraudulent use.
After all, it's your money.  Don't let these dishonest convenience store associates deny you access to your hard earned money with their ultra-high authorization holds when you pay at the pump.
Besides, there's a lot of good convenience stores and gas stations out there that want your business.  Unfortunately, there are a number of convenience stores and gas stations that pay lip service to customer service and don't deserve your business.

No comments: