Debit Card Holds
When you use a debit card, the store clerk will swipe your debit card for authorization. When the approval is given, a hold is placed on your debit card for the amount of the purchase. This is called a pre-authorization hold. The hold will remain on the debit card until the purchase comes in to clear and matches an authorization hold or for 3 days if no authorization match comes through. An authorization may not match if the merchant sends through a charge for a different amount than the original authorization amount or if the transaction date is different from the original authorization date.
If you have a hold on your debit card, any new purchases made will be added to that hold amount. If your purchase amount is close to the balance in your checking account, then your purchase may be declined.
Let's say you have a hold on your debit card from a $60.00 purchase you made that has cleared your checking account leaving you a $100.00 balance. The hold did not release because the purchase did not match any holds on file. Then you try to make a $50.00 purchase; that declines because your hold amount of $60.00 is added to your new purchase amount of $50.00, bringing your total to $110.00, which is more than the balance left in your checking account.
You also have credit limits set on your debit card. These credit limits are based on a 24-hour period. Lets say your credit limit is set at $500 and you made a purchase today of $300. That purchase is placed on hold. Then you attempt to make another purchase today of $300. The purchase would be declined because the total of the 2 purchases is $600, which exceeds your $500 credit limit.
Some merchants, such as restaurants, gas stations and hotels, may authorize for an amount greater than what you were actually billed. They do this because the amount of your purchase is unknown at the time of authorization. This larger authorization amount allows for tips, room service, etc.
PIN generated transactions will not place a hold on your debit card. Since these types of transactions are processed on the same day, they do not require a hold.