Credit Cards Credit Card Basics What Is an Authorized Amount? Authorized amount explained in less than 4 minutes By Logan Allec Updated on December 31, 2021 Reviewed by Khadija Khartit Reviewed by Khadija Khartit Twitter Website Khadija Khartit is a strategy, investment, and funding expert, and an educator of fintech and strategic finance in top universities. She has been an investor, entrepreneur, and advisor for more than 25 years. She is a FINRA Series 7, 63, and 66 license holder. learn about our financial review board In This Article View All In This Article Authorized Amount Definition How Does It Work? Types Photo: Maskot / Getty Images Definition An authorized amount is the amount of money in a customer’s bank account that a merchant may place on hold using the customer’s credit or debit card when it is presented for purchase. Definition and Example of an Authorized Amount An authorized amount is the dollar amount placed on hold in your bank account when you use a credit or debit card linked to that bank account to make a purchase. The merchant does this to ensure that your card can be used to make the purchase. Alternate name: Merchant authorization For example, if you are making a credit card purchase at the grocery store for $100, the store will place a hold for $100 with your credit card issuer. In this example, the authorized amount is $100. How Does an Authorized Amount Work? When you make a purchase with a debit or credit card, the merchant you are purchasing from requests authorization from the card issuer to confirm that the card you are using is active and that you have the credit limit (in the case of a credit card transaction) or funds available (in the case of a debit card transaction) to complete the purchase. After this authorization is made, your available amount to spend on your card is reduced by the authorized amount, even though the transaction has not been settled yet. The authorized amount will appear as a pending transaction in your account activity until settlement occurs. If the merchant is unable to authorize the necessary amount, the purchase will be declined. In most cases, the authorized amount is equal to the amount of your purchase, but there are some circumstances where these amounts may be different. Note If you use a debit card and have an authorized amount placed on the account linked to your card, it may show up as a pending charge on your account history. When the amount is finalized, it will show up as a debit. Types of Authorized Amounts While most authorized amounts are equal to the actual amount of the purchase, it is common for the authorized amount in certain kinds of transactions to differ from the final purchase amount. Restaurant Authorized Amount When you pay with a debit or credit card at a restaurant, you review the receipt showing your subtotal and sales tax and then provide your card to the server or cashier to run your card for this amount. At this point, the restaurant does not know how much you will tip, so they may authorize the amount of your subtotal plus tax plus an additional 20% tip tolerance to ensure that your card will not be declined when you add the tip amount after your card has been run. Whether a restaurant can authorize a tip tolerance may depend on the card issuer. For example, Mastercard does not permit a tip tolerance on in-person restaurant card transactions but does permit it for card-not-present card transactions at U.S. restaurants, such as if a customer orders delivery through an app and wants to tip the driver. Gas Station Pump Authorized Amount When you pay with a debit or credit card at a gas station pump, there is no way for the station to know exactly how much gas you are going to pump. As a result, some gas stations may authorize an amount as high as $100 to ensure that your card will be able to cover the transaction. On the other hand, some gas stations simply authorize a nominal amount such as $1 just to ensure that your card is working. Note The authorized amount at some merchants, such as gas stations, may stay on your account history for up to three days until the actual amount reaches your card issuer. Hotel Authorized Amount When you check into a hotel, the hotel may not only request authorization for the amount of your room fees and taxes but also for an estimate of any incidental fees you will incur during your stay. Key Takeaways When you use your credit or debit card to make a purchase, the merchant will place a hold for a certain amount with your card issuer in order to ensure that your card is able to be used for the transaction. This amount is known as the authorized amount.The authorized amount is typically equal to the amount of your purchase, but it may be different than your final purchase amount if this amount is not known when your card is presented.Restaurants, gas stations, and hotels are examples of merchants at which the authorized Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. First Interstate Bank. "Personal Debit/ATM Cards. Why Are Some Pending Debit Card Transaction Amounts Different Than the Actual Amount?" Accessed Sept. 22, 2021. East Texas Professional Credit Union. "Preauthorization Holds—Frequently Asked Questions," Page 2. Accessed Sept. 22, 2021. East Texas Professional Credit Union. "Preauthorization Holds—Frequently Asked Questions." Accessed Sept. 22, 2021.