Friday, July 4, 2008

Happy 4th of July!

Happy 4th of July to all of the HomeATM Blog subscribers and readers whom reside in the good ole US of A.

Here's hoping that you all enjoy your long weekend with both friends and family, tasty barbeques, a couple of frosty ones and some fireworks. Speaking of which, here's a high resolution shot (click to enlarge) of some fireworks behind Buckingham Palace overlooking Lake Michigan in my favorite and the USA's most beautiful city...Chicago.

Enjoy and we'll be back on Monday!

More On Effects of Using Debit Cards to Pay at the Pump

This from the Sacromento Bee which discusses holds being applied to debit cards.

With thousands of Californians preparing to hit the road for the three-day Fourth of July holiday weekend, many could encounter a few surprises at the gas pump.
And we're not talking about the fuel price.

Instead, some pay-at-the-pump transactions involving credit and debit cards are catching motorists unawares. The first is when the pump automatically shuts off at $75, even if you haven't finished fueling up. Hitting that $75 cutoff when using a credit card was once unlikely, but rising gas prices have made it increasingly common.

It's set at that amount because service stations and other retailers selling gas are liable for fraudulent credit card transactions above $75, under terms set by Visa and MasterCard.

What's the easiest solution when you abruptly hit that $75 cutoff? Start over. That's what Harry Lewis, a Citrus Heights construction worker, does to fill the 38-gallon tank on his heavy-duty Ford pickup. As soon as he hits the $75 limit and the pump shuts down, he starts over with a second fill-up. "My credit card bills are out of sight, but what am I going to do?" said Lewis said. "I have to have the truck to work."

Other solutions are to pay cash or go inside and use your credit card at the cash register. Another potential at-the-pump pitfall involves use of an offline debit card, also known as a "signature debit transaction." Offline debit cards typically bear the logos of major credit card companies, such as Visa or MasterCard, and carry some restrictions, including a daily limit or a limit equal to the current balance in the user's bank checking account.

Unlike a regular online debit card, they do not require a PIN number. Any transactions typically post to the holder's checking account within 48 to 72 hours. It's that lag time that presents a potential problem. Because individual gas purchases vary so much, service stations have long had the ability to set limits on "preauthorized" amounts. In past years, preauthorization limits were set around $35. But as gas prices have soared, preauthorization amounts have likewise gone up, to $75.

Today, a consumer swiping a Visa- or MasterCard-branded offline debit card at the pump will likely have a 48-to-72-hour hold on that $75 until it's posted to his or her checking account, even if the customer spent only $20 to top off the tank. (Note: This is not true for a regular online debit card using a PIN that automatically debits the amount, usually within minutes.)

The credit card industry does not have firm figures on the number of U.S. debit cards in circulation but estimates peg it at more than 75 million. A 2007 study conducted by Boston-based Dove Consulting Group reported that 85 percent of debit cards in circulation were capable of initiating both PIN (online) and signature-authorized (offline) transactions. Dove Consulting said signature debit transactions accounted for 62 percent of all debit transactions at the point of sale, with PIN debit used 38 percent of the time.

If a customer's checking account balance was $50 before the offline debit card swipe initiated the $75 preauthorization hold, the account might be shown as overdrawn. That, in turn, can create a situation where the consumer is denied access to checking account funds or hit with an overdraft charge. While credit card companies, retailers and bankers are in general agreement that preauthorization practices guard against fraudulent transactions, there is recognition that consumers using offline debit cards can get burned.

There aren't too many good options for the retailer, say industry sources. "Sure, the retailer can stop it. The retailer can force you to (use) PIN debit or force you to pay cash," said Jeff Lenard, spokesman for the Alexandria, Va.-based National Association of Convenience Stores. But those choices, he noted, will likely drive customers to competitors.

Lenard advised consumers using offline debit cards to keep close track of how long a checking account hold stays in place on their at-the-pump transactions. "If they're not seeing those (holds) drop off within three days, they need to call the bank," he said.

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