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When you check in at a hotel, the front desk may place a temporary hold on your funds to protect against damage to the room.
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Paying with a credit card rather than a debit card or cash gives you more security in the event of fraud.
But another reason to consider using a credit card is that some types of purchases result in a hold on your funds.
Examples include gas stations, hotels, and rental cars. If you pay with a debit card, you could see hundreds of dollars temporarily become unavailable.
Read Insider’s guide to the best credit cards.
When you reach the checkout counter and go to swipe or enter your card information, it’s not always a wise idea to reach for your debit card. In addition to weaker security and fewer protections for your money, debit cards may tie up funds in your bank account that you need to pay the bills.
When using your debit card at the locations below, you’re likely to find a hold placed on your card. A hold places your funds into a limbo where you can’t withdraw them from your checking account even though the merchant hasn’t officially charged you.
If you use a credit card, the same hold happens on your account. However, it doesn’t restrict you from withdrawing money from your checking. Instead, it just goes away in a few days without impacting your cash flow. Here are three places to always use a credit card to avoid holds on your bank account.
We’re focused here on the rewards and perks that come with each card. These cards won’t be worth it if you’re paying interest or late fees. When using a credit card, it’s important to pay your balance in full each month, make payments on time, and only spend what you can afford to pay.
Gas stations
Gas stations have a unique risk compared to other businesses. You could hypothetically drive up, fill your car, and be unable to pay. That’s why many gas stations require you to pay before you pump if paying with cash. For card purchases, it works a little differently.
When you pull up to a self-serve pump and swipe, insert, or tap your card, the gas station authorizes a specific amount, often around $50 to $150, to make sure you can pay. Then, after you are done pumping, the station charges you for your gas. But the authorization doesn’t go away right away.
It can take a few days for the authorization to vanish and release your funds, which can make it temporarily look like your account was charged double or more. If you use a credit card with a sufficient limit, however, you’ll hardly notice.
In addition, you can earn bonus credit card rewards for gas station transactions. These cards protect your checking account holds while rewarding you specifically for gas purchases:
Costco Anywhere Visa® Card by Citi — Earn 4% back on the first $7,000 spent on eligible gas and EV charging worldwide (including at Costco) each year, then 1% backBlue Cash Preferred® Card from American Express — Earn 3% back at U.S. gas stations (cash back is received in the form of Reward Dollars)Wells Fargo Autograph℠ Card — Earn 3x points on gas station purchasesU.S. Bank Altitude® Connect Visa Signature® Card — Earn 4x points on gas and EV charging station purchases
Hotels
While you may not be a rockstar with plans of partying, throwing TVs out of windows, and trashing your room, the hotel doesn’t know who will cause damage and who won’t in advance. They also want to make sure you can pay for the room and any incidentals, like room service or minibar charges, before you hit the road.
To protect themselves, they typically put a hold of around $50 to $200 per night during your stay. And again, it can take a few days for the hold to release after you check out. If you use a debit card, that hold can put a serious strain on your cash. But with a credit card, the hold comes and goes with little impact on your finances.
In addition, some cards offer travel insurance with no added cost, cash-back or travel-rewards bonuses for hotel stays, or both! Here are some popular choices for hotels:
The World Of Hyatt Credit Card — Earn 4 points per dollar for Hyatt purchases, get an annual free night at a Category 1-4 Hyatt hotelMarriott Bonvoy Boundless™ Credit Card — Earn 6 points per dollar at participating Marriott Bonvoy properties (earn up to 17x points as a Marriott Bonvoy Silver member), enjoy an annual night reward at Marriott hotels that cost up to 35,000 points per nightChase Sapphire Preferred® Card — Earn 5 points per dollar on travel purchased through Chase Ultimate Rewards® and 2 points per dollar on all other travel purchases, including hotels
Rental cars
When a company hands you a machine worth thousands of dollars to drive off into the sunset, they want some assurance they’ll get their car back, or at least enough money to replace it. Rental companies typically put a hold for hundreds of dollars on your account.
Debit card? Not cool. Credit card? No big deal.
Even more, when you get to the rental car counter, you’re bound to get the awkward offer for the rental car company’s insurance for around $10 to $20 per day. They will probably tell you that this insurance will protect you from any type of damage to the car, which is true. But they won’t tell you which credit cards protect you all the same.
Some cards include a combination of bonus rewards on rental cars through the travel category as well as primary rental car insurance (also known as auto collision damage waiver), which protects you against theft and damage without requiring you to go through your own auto insurance policy (but doesn’t include liability coverage).
Here are some great cards for rental cars:
Chase Sapphire Preferred® Card— Earn 5 points per dollar on travel purchased through Chase Ultimate Rewards® and 2 points per dollar on all other travel purchases like rental cars. It also includes an auto rental car collision damage waiver.Chase Sapphire Reserve® — Earn 10x total points on car rentals purchased through Chase Ultimate Rewards® (after earning the $300 travel credit) and 3x points on other travel with this premium travel rewards card. It also includes primary car rental insurance.Capital One Venture Rewards Credit Card — Earn 5 miles per dollar on hotels and rental cars booked through Capital One Travel and 2x miles on everything elseCapital One Venture X Rewards Credit Card — Earn 10x miles on rental cars and hotels booked through Capital One travel, 5x miles on flights booked through Capital One travel, and 2x miles on everything else
Be careful when handing over your debit card
The risks of using a debit card go beyond a temporary hold placed on your account. At a gas station, for example, you’re at a high risk of running into a card skimmer. Skimmers are devices that steal your card information for fraudulent purchases.
If your credit card is used for fraudulent purchases at a gas station or elsewhere, you have $0 in liability for the purchases. With a debit card, the bad guys can drain your bank account and you may not get everything back. Credit cards offer the most protection against fraud of any common payment method.
If you do use a credit card, make sure to pay off your balance in full by the due date to avoid interest charges. If you use your credit card like a debit card, it offers the best protection at checkout. And it protects your bank balances from holds. That’s a win-win combo anyone should consider the next time they reach for their wallet at a gas station, hotel, rental car company, or beyond.