I stopped using credit cards for gasoline some years ago, when I found that the stations around here commonly charge $75 against your card for even a $5 purchase. That is, they put a hold on $75. Why, I don’t know, but one station owner tried to explain it to me and it sounded like BS. No other type of merchant does this, in my experience.
I long for the good old days when I could fill ‘er up for nothing and Dad would pay the man next time they ran into each other. :)
This is totally legitimate. Credit card companies do this to offset the risk they take by allowing you to pay for a purchase with your credit card without signing any receipt as you would with any other purchase. This is why there are different financial processes in place if you pay inside the at the counter instead of paying at the pump.
This is commonly done with debit cards. I hadn't heard that this was done with credit cards too.
Somebody explained to me that some sales are not reconciled until the end of the day (ie. your charge is 'authorized', but the amount isn't reported until a batch sales transaction is reported to you bank or credit card company). The length of the 'hold' can vary depending on where the retailer is in their reporting cycle. I suppose that it's possible that the same happens with credit cards.
When holds are placed, it is supposed to be for the expected amount of the charge, plus a little extra to cover any last-minute add-ons. For a car rental, that would be a full tank of gas if the customer did not fill it before returning it. At a hotel, that could be a room service charge.
So the hold on a gas pump transaction is the same concept, but the transactions closes in minutes, instead of days for a hotel or car rental.