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I have recently rented a car for about a month and one thing just came to my mind.

At the rental office they took a very high deposit into my credit card (I have a foreign license, this happens in the US).

I wonder that since this pre-authorization would be in my credit card before and after the closing period of the credit card -at the end of each month, would they actually charge it to my linked bank account?

  • Are you still renting the car? If so, that's why. – RonJohn Feb 17 at 4:13
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    At the end of the question you mention debit card. Is this a question about a debit card or a credit card? – mhoran_psprep Feb 17 at 12:47
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    What country are you asking about? The terms "credit card" and "debit card" mean different things in different countries. – Tanner Swett Feb 17 at 14:33
  • My mistake, I meant my linked bank account. The country of the bank account and credit card is South Korea. The country where I booked and rented the car is USA. – Vicente Bolea Feb 17 at 16:43
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    You could probably get a quick and accurate answer for this by calling your bank. I don't really recall seeing much activity in here around Korean banking and things may be different than the rest of us are used to elsewhere in the world. – dwizum Feb 18 at 15:31
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This is the concept of "locked capital/money" as a guarantee or collateral.

Say you have $5,000 limit to spend on your card. The car rental company took deposit of say $2,000. This $2,000 money isn't going anywhere, but remains in a locked state as a collateral. It will not leave your credit card account.

However, till the time you hold the car, this money will NOT be available to you for spending. You can only use the remaining $3,000 on your card, as $2,000 is locked as collateral.

In case you return the car in time, this lock will be removed as the car rental company release it, and you will have the full credit of $5,000 on your card for spending.

However, if you don't return the car, the car rental may not release your collateral money, or in the worst case scenario, they may charge your card - that is, the money will then actually get transferred to their account permanently from your card. Then you will be liable to pay the credit card dues to your card issuing bank.

So as long as you honor your timeline to rental car company, all will be good. Just remember that the locked amount is not available so don't swipe your card for excessive amounts beyond the remaining limit.

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  • Good answer! Welcome to PF&M SE, I hope you enjoy it here. – MD-Tech Feb 21 at 16:46
  • "In case you return the car in time, this lock will be removed as the car rental company release it, and you will have the full credit of $5,000 on your card for spending." ... well, the full $5,000 less the actual cost of renting the car. The $2000 is usually well over the expected amount of the planned rental, but not many places charge you 0 for the rental. :) – R. Hamilton Feb 21 at 18:49
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A credit card pre-authorization is much like any other charge to a credit card, except instead of actually debiting funds from the cardholder there is a temporary "hold" on the funds. This means that the amount isn’t charged to your card, so you won’t pay interest on the amount (and it won't be charged to your linked bank account if you have auto-pay on). But the funds won’t be available for other purchases.

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