Credit Card Blocking And How To Avoid It

Have you ever heard of credit card blocking? Do you know what it is and how it might affect you? If you are not sure what blocking is, this article may be able to clear up some of the mystery.

If you were ever told that you were over your credit limit (when you knew you were not over the limit) you may have experienced credit card blocking. This seems to happen a lot when consumers are paying for hotels or rental cars.

When you use your credit card to check into a hotel or to rent a vehicle, the hotel or rental company will normally contact the company that issued your card in order to give them an estimated total of your transaction. The credit card company will then either approve or deny the amount. If the transaction is approved, your available credit is immediately reduced by this amount. This is a block.

An example might clarify the way this works. Assume that you are using a credit card when you check into a $100-a-night hotel and you are going to stay for five nights. At least $500 would be blocked ($100 x 5 nights). Here is where it can begin to get tricky.

If you pay the hotel or rental bill with the same card that you presented earlier, the final charge from the hotel or rental company will replace the block in a day or two. If you decide to pay the bill with a different card, however, the credit card company you used at check-in might hold the block for up to 15 days after you have checked out of the hotel or paid the rental car company. This would be done because they were not notified of the final charge from the hotel or car rental company and therefore would not know you had paid another way.

The reason blocking is used is to make sure you do not go over your credit limit before checking out of a hotel or returning a rental car; both of which would leave the merchant unpaid.

For those people who are well below their credit limit, blocking is usually not a problem. However, if you are getting close to your limit you will want to be careful. Not only can it be embarrassing to have your credit card refused, but it can also present big problems if you need a room or a car and do not have cash in your pocket to pay for them.

Here are some tips to help you avoid being blocked.

Always consider paying your rental car, hotel, or motel bills with the same card that you use at the beginning of the transaction. You may also want to ask the clerk or rental rep to tell you the full amount that they are going to request from the card company. In the event you choose to use another payment method when checking out or paying the final bill for rental make sure you ask the clerk to remove the block.

You may also want to call your credit card company and ask them how long they block credit lines for these types of transactions. If you do a lot of traveling, you may want to find a company that use shorter block times.