I’m American but live abroad, so am not up-to-the-second on stuff in the US. Two years ago I went back for a long holiday, during which time my Sister and I rented a vehicle and took a road trip up to Kansas, taking turns buying gas.

At one fuel stop, it was my turn to pay. While I was paying with my US debit card, Sis went off to shop for something, and the clerk and I chatted. When it came out I live abroad, he asked if I was aware that a fee — I think it was $25 — had been deducted from my account but would be credited back within 24 hours.

I had been unaware of that, but was grateful for his mentioning it to me so I would know. Sure enough, the following day I checked, and the fee had been deducted then re-credited, credited even sooner than he had said it would.

Can the company use my money during the intervening hours? Yes, it can. Maybe I’m too forgiving — banks out here routinely sit on even electronic fund transfers days and even weeks, precisely so they *can* kite your money — but I can see a company there (in the US) covering itself a few hours, and feel that’s fair enough.

In theory, yes, reversing a charge should be immediate, just like a purchase. But it’s not (for the return & fraud reasons I noted) and unless/until the banks are forced to change those rules, a return’s going to take longer to process than releasing a hold.

In other words, I’m not defending the process, just explaining why a debit card gets treated differently in these situations.

@ThePlaz: It’s true that gas can’t be returned, but lots of things sold at a gas station can be. My guess is that some of their processing rules cover all purchases made at the site.

@J Bloe: No, many banks (at least here) offer free debit cards to their checking account customers. I pay no fee for mine, so it costs no more to use than a credit card. That many not be the case everywhere.

This is an overview of how your debit card differs from your cc. Very useful.

Even if you have a credit card it messes up your book keeping. And if you have a debt-card that money is frozen.

They should be a lot faster to release the charges. (There was a hearing in Congress yesterday – but it was about finance charges for “sub-prime” borrowers. This should have been brought up).
-Michael
http://theplaz.com

My wife got one as a rebate on her phone and after a screw up in the way it was charged at one restaurant, it took weeks of calling to get the charge reversed. Another restaurant charged it for the amount on the card and it was rejected because we found out that when cards are used at restaurants, they are automatically authorized for a higher amount to account for the tip which will be put on later.

The prepaid debit cards are often rejected by regular merchants processing terminals if you aren’t spending the exact amount on the card.

We were finally able to use the card when I called Cingular to complain and they said I could put the value toward her monthly bill.

And the final “gotcha” in the fine print is that most of the cards expire and if you haven’t used all the value, you lose it. I couldn’t get an answer whether the money would go back to Cingular or the issuing bank if we hadn’t been able to use her card.