Remember issue 97:10:02 ("Are Stored Value Cards the Same as Cash?") when we explained how a debit transaction works? We told you how the money doesn't leave the bank when you make your transaction; it leaves your account but the bank is still making money on it. Well, the story gets better.
Not only does the bank make money on your money, but they may also be denying you access to your funds. When you make a transaction the funds are verified and a "hold" is placed on that money, earmarking it for that purchase.
Later, anywhere from three to 72 hours, the money is actually deposited in the merchant's account and the hold is cancelled, ideally. But, that doesn't always happen. Sometimes the hold remains on the money, even though the transaction has already been settled. So, cardholders are denied access to funds because the bank thinks the sale hasn't closed.
According to a Bank of America spokesperson, in most cases the hold is removed at the same time the money is transferred to the merchant. "That's how it should work." A Visa spokesperson said the problem is uncommon but does happen and the hold can actually outlast the transfer.
In response, in April of next year Visa will require banks that issue debit cards to drop the holds after three days or when the money is transferred. But by then it may be too late for some cardholders. In the words of one customer who was denied access at the point-of-sale, "I'm going back to writing checks."
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