The Use of Credit and Debit Card Blocking

When Applying for a Credit Card Ask About the Policy on Blocking

Jul 13, 2009 Neil Gunn

Credit and debit card blocking also known as putting a hold on a credit or debit card, can create a sometimes unforeseen problem when booking into a hotel.

Credit and debit card blocking is a common practice used by most hotels and many other businesses. The Federal Trade Commission (FTC) offers some advice on how it works and why it can become a problem.

If for example a person checks into a hotel, lets say for five days at $150 per night and wants to pay by credit card. At this stage the mathematics are easy, five nights at $150 per night is $750.

However that’s the minimum amount that will be charged to the card. On top of that there may be meals, drinks at the bar, telephone calls and all the other things that people can spend their money on in a hotel. So the bill at the end of the week could be substantially more.

Hold on Credit Card

The hotel of course wants to know that it’s going to get its money. They will estimate how much each guest is going to spend. The hotel then takes the card, contacts the credit card company and asks it if there is enough money in the account to cover the week’s stay. Then if there is, it asks the company to put a hold on the credit card for that estimated amount. That means the person cannot spend the money elsewhere.

Credit card blocking can become a problem at this stage. If the guest is not planning to spend any money other than the rate for the room and the hotel asks for a block on more than that rate, it is potentially leaving the guest, if near their limit, without funds. It’s essential therefore if a person’s near their credit card limit they must ask the hotel or other business how much they have asked the card company to hold and how long it will be in place.

Credit Card Blocking

At the end of the week a final bill is presented for the guest to pay. It’s at this stage that credit card blocking can cause other problems, some of which the Federal Trade Commission has highlighted.

The FTC point out that if the same credit or debit card that was presented when the guest checked in is used is to settle the bill, the final amount paid will replace the blocked amount within a few days.

However if the final bill is paid with another credit or debit card, by check or with cash, the person should remind the hotel that they are using a different form of payment and ask for the credit card hold to be taken off. If the guest forgets to do this and the hotel doesn’t take the hold off, that amount will be unavailable to spend.

To sum up:

Try to pay with the same credit or debit card used at the start of the transaction
Ask how much is being blocked on the credit card
If paying with a different card or by different means ask to have the credit card hold removed
When applying for a credit card ask the company for its policy on credit card blocking

Sources:

Federal trade Commission (FTC), Credit and Debit Card Blocking, June 2003

The Indiana Department of Financial Institutions, Credit card blocking

The copyright of the article The Use of Credit and Debit Card Blocking in Personal Budgeting/Finance is owned by Neil Gunn. Permission to republish The Use of Credit and Debit Card Blocking in print or online must be granted by the author in writing.

Credit Card Blocking