The Money Helper

Credit Card blocking or a credit card hold is when a business places a hold on your credit card sometimes more than the total amount that is owed for a reservation such as at a hotel, rental car, etc. When you use your credit card at registration for a hotel or to rent a car, the cashier will contact your credit card company and provide an estimated total of your bill. If the transaction is approved, then that amount is held in reserve. In addition to the actual cost of staying in the hotel or renting a car the clerk may tack on reasonable “incidental” costs for such items as food or gasoline. This happened to me, I later found out the block was for more than the total cost of my stay at a hotel.

If you pay these bills with that same credit card used when you checked in or returned the car, the purchase will replace the block usually in a one or two days. However, if you pay using a different credit card or with cash the block may be held for up to 15 days after you’ve checked out. This happens because your credit card company was not notified that you used another form of payment and assumed they had to continue to hold that amount in reserve on your credit card. This can be avoided, by asking the clerk, receptionists or merchant to notify your credit card company, to remove their block promptly. Afterwards, contact the credit card issuer to verify the block was removed.

Some experts believe that credit card blocking can be good thing because it makes sure you don’t exceed your credit line before checking out or returning a car. I however do not like credit card blocking. I feel too many people are accessing my account which could increase my chance of being a victim of identity theft. Using blocking means that the company you receive these services from can be assured that you will pay your bill. If you are far enough below your limit you usually will not have a problem. Unfortunately, if your balance is near the credit limit, it can cause a lot of inconvenience by tying up credit that you may need for emergency purposes and can cause a denied transaction for an item that is purchased after the block is placed. 4 Tips to avoid problems with credit card blocking:

1. Pay for a hotel or rental car with the same card you used at check-in.
2. Ask the clerk how much will be blocked and how they determined that amount.
3. If you pay with another method, ask the clerk to call the credit company and have the block removed. Get the clerk’s name and ask for proof that the block was removed if possible. Also contact your credit card company to ensure the block was removed.
4. When you apply for a credit card, ask if they block credit lines and for how long.

Unfortunately, credit card blocking in not illegal as long as the amount blocked isn’t above what the customer is likely to pay at the end of the transaction. Most consumers are not aware that it happens at all, because the blocked amounts don’t come close to their credit limits. Some businesses will remove a block at the consumer’s request, if they see the bill has been paid.

Some restaurants use credit card blocking for a large party or a dinner event. Blocking ensures the business will get paid if the customer relinquishes from paying the final bill, prevents the cardholder from exceeding the credit limit before checking out of a hotel, returning a rental car or other similar type of transaction. I now pay for hotel reservations prior to check-in so that a block is not placed on my credit card. However, if a block is placed it is only for a small amount.

To prevent credit card blocking: use the same credit card the reservation was made, pay down your credit card to allow room for extra items that you may need to purchase in addition to the reservation costs, ensure the block is removed from your credit card after the reservation amount is paid in full. For more information write to: Credit Card Blocking, Correspondence Branch, Federal Trade Commission, Washington, DC 20580.