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ALWAYS put authorization charges on your credit card

Depending on what kind of plastic you use, authorization charges can be either an invisible you charge that's gone before you notice, or an impressive pain that will have you scrambling for a reverse charge.

First, the skinny on authorization charges; they act as a deposit or a hold charge put on your card, usually when you rent something. If you use your credit card for such charges, odds are your authorization had been accepted and, upon return of equipment or once you've checked out, reversed before you've even had time to check your bank account. Out of sight, out of mind - that's how we like our authorization charges.

However, anybody that's ever put an authorization charge on their debit card knows the devastation of checking your balance post-authorization charge and finding that your available balance has been reduced significantly.

Why? Because authorization charges really do charge your account, and getting that money back in your account - especially on a weekend - can be arduous. I'd be lying if I said I hadn't done this before, and can tell you firsthand that expediting a reversal includes multiple calls to the company that charged your account and the bank. It can also lead to overdraft fees you didn't see coming, or service fees your bank charges that you didn't even know existed.

I can also tell you that, headaches aside, there's a definite psychological difference to having your checking account charged versus your credit line. When you see that your balance has been charged, it almost feels as if your literal money has been unfairly taken from you. When it's on your credit card, you're supremely confident that the reversal will be smooth and will have no long-term effects on your credit balance.

So the next time you're asked for an authorization charge, be sure to hand over your credit card - not your debit card. 

on Wed, 2013-03-13 08:10