Swiping credit or debit card

Can a pending debit card authorization result in overdraft fees?

January 1, 2015
Tagged as: Banking Basics
A pending debit card authorization alters the available balance in your account. If that reduced available balance is not sufficient to cover other transactions that post or clear your account that evening, then overdraft fees could be charged.

Example: John has a $100 available balance. He makes a $75 debit card purchase that shows pending on his account, reducing his available balance to $25. He then makes another purchase of $50, The $75 charge remains pending for 2 days, but the $50 charge posts and clears that evening. Even though that $75 remains pending, it does reduce his available balance so when the $50 charge posts, it will result in an overdraft,

Example: Julie has $250 in her account and uses her debit card to pay $175 for theater tickets. She decides, after the card is swiped, to pay by cash. The theater operator does not reverse the debit card authorization immediately and her available balance is reduced to $75. That night, a $200 check she had previously written posts to her account. As a result, the account is overdrawn and a fee is charged.

Example: George had $75 in his account. He performed charges totaling $85, bringing is available balance to a negative $10. If George does nothing and those $75 charges clear that evening, he could be charged for an overdraft. If George stops by the bank to make a deposit of $100 before the $75 in charges clear, he could avoid that overdraft, as long as nothing else posts that evening.

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