Problems due to double-holds

Walletwatch

Not sure if this is the norm in the banking industry here, or an anomaly. I have my main account with Citibank here, and am faced with a problem on most occasions when I use my debit card for purchases.

Say, I make a purchase for £500 and use my debit card for it. The bank places a hold on the money for two days, for the merchant to claim back the money. Quite often, the merchant does claim it the next day itself, but the hold is not removed immediately, and persists for the whole two days, unless I call the Online Banking service and convince them that since the debit has already been passed into my account, the hold should be removed.

Now, this is at best, an irritant, and at worst, when large transaction amounts are involved, a serious liquidity crisis (albeit for a max of 2 days). Not sure if this has any interest implications (don't think so, the value dated balances should not be affected by this anamoly). I would expect the hold to be removed automatically once the merchant has been paid. Is this an unrealistic expectation? ???

The only other place I have used debit cards is in India (where I come from), and this is definitely not a problem I have encountered there.

But then, low-value cheques get cleared in one working day there, and high value cheques same day

deemy2004

I don't get what your saying ???

If you pay by debit card, then yes the bank puts a hold on the money until its finished being transferred to the merchant, may take a day or two until it vanishes from your account.

But what difference does this make to your use of the account ?

Once youve used a debit card, then that amount is set aside to be transferred out.

Simple as that.

dunstonh

Earmarking, as it is known at Lloyds. Depending on the method used by the retailer, the earmark can vary in length.

Another by product of the system is that the earmark is converted from sterling to USD and back to sterling again with some systems which makes the earmark amount often different to the sale amount.

Its rarely a problem unless you do regular larger transactions and maintain a lowish balance on your account and use retailers using older equipment

Walletwatch

I don't get what your saying  ???

If you pay by debit card, then yes the bank puts a hold on the money until its finished being transferred to the merchant, may take a day or two until it vanishes from your account.

But what difference does this make to your use of the account ?

Once youve used a debit card, then that amount is set aside to be transferred out.

Simple as that.

Sorry, don't think I made myself clear enough. Say I have £1000 in my account and I make a purchase for £500 today. The merchant requests for an authorisation when I present my debit card, and the bank promptly places a hold of £500 on my account, which is earmarked towards the purchase. The balance available to me for withdrawal / further purchases on my debit card is £500. So far so good.

The retailer now claims the money on the same day, as a result of which the amount of £500 is debited to my account. One would expect my book balance to reduce to £500, and the available balance to stay at £500, i.e. the hold to be automatically removed at this stage. However, Citibank tells me that their system is not in a position to automatically remove the hold, and the hold has to stay for the two days. Thus, while I should have had £500 available in my account for withdrawal, I am left with nought :-[ and will not have the money available, till the two working days.

One does not dispute the placing of the hold for the purchase, but the issue is that the hold persists even after the account has been debited, leaving me out of funds for a max of four days, sometimes, if the purchase is over a weekend.

deemy2004

Well that IS different, and I don't think Ive experienced that with the debit cards I use - primarily halifax.

Maybe its time to change banks ?

Walletwatch

Yes, I guess, but is there something I can do by way of complaining and either setting this right (tall order, that) or extracting my pound of flesh from them, assuming I am on the right?

What I had in mind is - the biggest reasonable purchase I see myself making on the debit card is around £1500, so if they expect my balance to subsidize the impotence of their system, they should offer me a free overdraft, at least to the extent of this amount, so I am never inconvenienced by this "double-hold" ever?

Do you think it's worth a shot? What should I set out doing? Am already drafting a letter to them.

Cheers

P.S. Have already opened other accounts to work around this.

deemy2004

Yeh complain

Tell them that other banks don't do what there doing, and your going to complain to the banking ombundsman.

You could ask for the overdraft, but better for your first letter be just a complaint and see what they offer you in return.

Milarky

Walletwatch,

Why not go back to old-fashioned [glow=red,2,300]cheques[/glow] for larger purchases? A cheque 'clears' when it is presented and the 'hold' was never there in the first place ???

Walletwatch

I think it is more of a mental block than anything else, plus not sure all establishments where I do make purchases do accept chq payments ???

jonesMUFCforever

Can you please give me a little more info? You say you have a debit card but is it a full debit card or an Electron/Solo type of card. If latter this could be reason for your problem, as these are issued to people generally on accounts that cannot go overdrawn or not eligible to borrow on an account. It does take an extra day or two for earmarkings to be deleted on some of these cards.
Eric

Walletwatch

It's a full debit card, with an overdraft facility as well.