Have you ever been told you were over
your credit card limit, or had your debit card declined,
even though you knew you had available credit, or money
in your bank account? If this happened shortly after
you stayed in a hotel or rented a car, the problem could
have been card "blocking."
What's Blocking?
When you use a credit or debit card to check into a
hotel or rent a car, the clerk usually contacts the
company that issued your card to give an estimated total.
If the transaction is approved, your available credit
(credit card) or the balance in your bank account (debit
card) is reduced by this amount. That's a "block."
Some companies also call this placing a "hold"
on those amounts.
Here's how it works: Suppose you use
a credit or debit card when you check into a $100-a-night
hotel for five nights. At least $500 would likely be
blocked. In addition, hotels and rental car companies
often add anticipated charges for "incidentals"
like food, beverages, or gasoline to the blocked amount.
These incidental amounts can vary widely among merchants.
If you pay your bill with the same
card you used when you checked in, the final charge
on your credit card, or final amount on your debit card,
probably will replace the block in a day or two. However,
if you pay your bill with a different card, or with
cash or a check, the company that issued the card you
used at check-in might hold the block for up to 15 days
after you've checked out. That's because they weren't
notified of the final payment and didn't know you paid
another way.
Why Blocking
Can Be a Problem
Blocking is used to make sure you don't exceed your
credit line (credit card) or overdraw your bank account
(debit card) before checking out of a hotel or returning
a rental car, leaving the merchant unpaid. Blocking
is sometimes also used by restaurants for anticipated
sizeable bills (like large groups at dinner or a party),
by companies cleaning your home, and other businesses
to ensure credit or account money will be available
to complete payment.
If you're nowhere near your credit
limit or don't have a low balance in your bank account,
blocking probably won't be a problem. But if you're
reaching that point, be careful. Not only can it be
embarrassing to have your card declined, it also can
be inconvenient, especially if you have an emergency
purchase and insufficient credit or money in your bank
account. On debit cards, depending on the balance in
your bank account, blocking could lead to charges for
insufficient funds while the block remains in place.
How to Avoid
Blocking
To avoid the aggravation that blocking can cause, follow
these tips:
When you check into a hotel or rent a car - or
if a restaurant or other business asks for your card
in advance of service - ask if the company is "blocking,"
how much will be blocked, how the amount is determined,
and how long the block remains in place.
Consider paying hotel, motel, rental car, or other
"blocked" bills with the same credit or
debit card you used at the beginning of the transaction.
Ask the clerk when the prior block will be removed.
If you pay with a different card, by cash, or by
check, remind the clerk you're using a different form
of payment and ask them to remove the prior block
promptly.
Ask your current debit card issuer if they permit
blocks, for how long, and from what types of merchants.
If they do, you may want to consider getting an overdraft
line of credit from your bank. Ask about a plan that
always automatically covers the overdraft and does
not involve a separate bank decision on whether or
not to pay it each time. Although you might incur
some interest on this plan if you don't pay off the
amount fairly quickly, you would not have an overdraft
that is not paid. Ask your bank if they offer an overdraft
line of credit, how it would work, and how much it
costs.
In addition, if you are considering
a credit or debit card, shop around. When comparing
credit and debit card offers, ask issuers if they permit
blocks, for how long, and from what types of merchants.
You may want to consider an issuer that uses shorter
blocks.
For More Information
The FTC works for the consumer to prevent fraudulent, deceptive
and unfair business practices in the marketplace and to provide information
to help consumers spot, stop, and avoid them. To file a
complaint or to get free
information on consumer issues, visit www.ftc.gov
or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The
FTC enters Internet, telemarketing, identity theft, and other fraud-related
complaints into
Consumer Sentinel, a secure, online database available to hundreds of civil
and criminal law enforcement agencies in the U.S. and abroad.