Credit is a convenience, as you can make a purchase when you lack ready cash, but can enjoy the purchase while you are paying for it. However, when dining out at a nice restaurant, it’s important to take notice of what the banking industry calls an “authorization hold.”
Let’s say your restaurant bill comes to $100 and you pay with your credit card. When it is run, an authorization hold is put on your account for $120, assuming you’re going to add a tip. You leave the tip in cash instead though. Still, your bank or credit card company “holds” that $120 for a couple of days until the actual amount of your charge is processed. This means you don’t have access to that $20. If you are close to your credit limit, it could mean a purchase is declined. If you used a debit card, it could mean a bounced check and overdraft fees.
Credit card processors discourage vendors from doing these kinds of holds, but they are perfectly legitimate as long as the vendor notifies customers of the practice. BBB advises consumers to keep tabs on their credit and bank accounts online. When dining, pay for your check and tip together with either credit or cash, but not both. Whenever possible, keep a “cushion” of available funds on credit cards by paying off the balance regularly.