What is the purpose of putting an authorization on a CC when you make a purchase? The authorizations put on the CC don't match the total purchase amount, most of the time it is more. why is that??
Generally they want to make sure that you have enough available credit to cover the purchase. When the actual purchase settlement is put through (these days 99% electronically), usually within 24 hours or less, the purchase amount will replace the authorized amount. Sometimes the authorization amount is higher than the ultimate purchase amount when at the time of authorization they're not sure how much you're going to purchase. A prime example is pay at the pump gas stations. I remember hearing stories a few years back that gas pumps would set up an authorization of something like $30-$50, because they thought you might be filling both tanks on your extended cab dual-axle pickup. Some people reported buying five or ten dollars of gas and then getting declined on their next purchase because the $50 authorization put them too close to their credit limit and the purchase settlement has not yet gone through. Lately I've been hearing that the pumps just authorize for $1 to make sure the card is active. If you end up purchasing $50 of gasoline and it puts you over your limit, most cards these days will accept the transaction so they can charge you the overlimit fee :-(
Authorization amounts vary from merchant to merchant. When I used to work for a Major Credit card company, I understood it that for petrol stations, for example, the usual authorization would be for $50, but during settlement the actual amount would post and erase the "pre-authorization" amount. At hotels, it differs as well, some hotels will pre-auth your card for anywhere from $1 to 1,000, depending on your stay. That's why we always used to say, if you are travelling on business, use your AMEX card (no preset spending limit). Rental car places are the worst, they will pre-authorize anywhere from the estimated cost of the rental, when I was in Brasil, they wanted to authorize $1,000 USD before releasing a car to me. INSANE!
I know it's inconvenient when you NEED gas, but I make it a point to get my cash advance and other things, THEN get the gas, that way I won't have a problem with my card getting turned down. A representative at Capital One says they love to do this as a courtesy to you, so if you are ever stranded somewhere, you can get gas. In the same breath she also said it can only be done 2 times per year
