Buying Gas with a Prepaid Debit Card

Adam Rust

If you attempt to use a prepaid debit card to buy gas at a pump, your card may be declined and your balance may fall to zero. Here's how to avoid that problem.

The bank turns down their card even though they have funds in their account.  Immediately after that, a balance inquiry indicates a balance of zero. The funds appear to be gone. The next gas station also rejects their card.

Two factors explain why this happens. First, you cannot overdraw a prepaid debit card. You can only spend what you have, and no more. Second, no one can be certain how much gas a person is about to purchase. The balance is known – but the upcoming expenditure is a mystery. The bank cannot reliably estimate the size of the upcoming gas purchase. Even if you are driving a Vespa, the bank has to assume that you are about to fill up a large vehicle.

Card issuers address this uncertainty by setting aside some funds as a precaution. They apply a deposit immediately. There is no universal deposit size. In my experience, the banks usually hold $75.

Unfortunately, it can take two full weeks before the bank restores the deposited funds to the prepaid debit card account.

These Bank Accounts Are Not Prepaid Debit Cards
Picture of card
Buying gas at the pump

To underscore how this feels, I’ve excerpted some comments made by real consumers to the Consumer Financial Protection Bureau’s Consumer Complaint Database. The CFPB publishes these comments with the permission of the commenters. They are a great resource for understanding the experiences of regular Americans.

“I recently visited a gas station to purchase gasoline with my prepaid card, and there was an issue with the pump which caused the transaction to time out without allowing me to purchase gas. I tried a second time and was only allowed to purchase nine dollars of gasoline, although I had $84 available before I began trying to purchase gas.”

“With a balance of approximately forty dollars, I attempted to make a gasoline purchase at the pump. When I entered my zip code, the sale was rejected. The balance on the card is now zero, and the card issuer says it can take up to 14 days to restore the balance to the card.”

“I went to get gas, and the card declined, so I was never able to get gas at all. I called the card company, and they could not find a reason as to why it declined but proceeded to tell me to tell me they will be holding all of the money I have on the card. It has been nine days, and they still haven't released my money. Not only that but they said it would be another five days before it is released. This has caused a huge problem and is a huge inconvenience.”

The Solution

You do not have to suffer a similar fate. You can buy gas with a prepaid debit card without having to establish a deposit. The secret is not to use the card at the pump. Instead, go inside and present your prepaid debit card to the clerk. Ask the clerk to debit your account for a specific sum. With a known expenditure, the bank will not apply a deposit.

The other alternative, if you must swipe at the pump, is to use a card with a balance of more than $100.

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Adam Rust has worked to defend consumers against harmful financial practices since 2005. He has written extensively about overdraft fees, payday lending, credit insurance, student loans, prepaid debit cards, high-cost installment loans, and subprime mortgage lending. The New York Times interviewed him when it reported on the CFPB's rulemaking on prepaid debit cards; subsequently, his research paper framed the debate on consumer protections.

He serves on the Board of the US Faster Payments Council. He is Director of Research at Reinvestment Partners in Durham, North Carolina. He is the author of BankTalk. He is the author of "This is My Home: Challenges and Opportunities of Manufactured Housing" and has testified to Congress on how to redress some of the problems with manufactured housing. See more on his LinkedIn profile.