What is the name of the temporary hold placed on funds when a credit card is used?

The temporary hold placed on funds when a credit card is used is called an authorization hold. It reserves part of the card’s available credit before the transaction is finalized.

During authorization, the merchant asks the card issuer whether the account can cover the purchase. If approved, the issuer places a temporary reservation for the authorized amount. The customer may see it as a pending transaction, and the available credit can fall even though the merchant has not yet received settled funds.

The merchant later captures or settles the transaction. The hold then becomes the final charge, is adjusted to a different amount, or expires and releases the available credit. Hotels, rental-car companies, restaurants, and fuel stations commonly use holds because the final amount may not be known immediately.

“Preauthorization” is often used informally for a similar event, but authorization hold is the standard term for the temporary reservation. A chargeback is a dispute process, while settlement is the later movement of funds.