Have you ever presented your credit or charge card to a store clerk and been surprised when told you were over your credit limit? If this happened soon after you stayed at a hotel or motel or rented a car, the problem may have been caused by credit card "blocking."
When you use a credit or charge card to check into a hotel or motel or to rent a car, the clerk usually contacts your card issuer electronically with the estimated cost. If the card issuer approves the transaction, your available line of credit is reduced by this amount. This is called a "block" (or "authorization").
For example, suppose you use a credit card to check into a $100-a-night hotel for five nights. At least $500 would most likely be blocked on that card. In addition, hotel and car rental companies sometimes add anticipated "incidental" costs for such things as food, beverages, or gasoline. These amounts can vary widely among merchants.
If you pay your bill with the same credit card you used at the beginning of the transaction, the final actual charge probably will replace the block within a day or two.
If, however, you use a different credit card, cash, or a check to pay for these services, the company that issued the credit card you originally presented might keep the block on for as long as 15 days -- after you've checked out of the hotel or returned the car.
This delay occurs because the first card issuer does not receive notice of the final charge and, therefore, is not aware that the transaction has been completed. Most card issuers program their computers to retain for a specific number of days all blocks that have not been replaced by final charges. Issuers often choose a 10 or 15-day period because it is longer than most hotel stays and car rentals. Holding blocks for this long ensures that card holders do not use their entire credit limit before checking out of the hotel or returning their rental car, leaving the hotel or rental car company unpaid. The number of days that blocks are retained varies widely among card issuers.
Consumers who are far below their credit limit probably will not be affected by credit card blocking. But for consumers with charges close to their credit limit, credit card blocking can present problems. For example, consumers who need to use their cards for emergencies may find that, because of this temporary block, they have no credit left to use.
Those consumers who pay for their room or rental car with cash, a check, or a different credit card also may have problems. They may find that they do not have access to the amount of the block for 10 or 15 days, even though they already have paid the bill in full.
If you do not want the aggravation that blocking can cause, you may want to:
Consider paying for all hotel, motel, or rental car expenses with the same credit card you used at the beginning of the transaction.
Ask clerks how much is being blocked on your credit line, and how that amount was determined, when you check into a hotel or pick up a rental car.
If you pay with a different credit card or cash, ask the clerk to remove the block.
In addition, when selecting among credit cards, ask credit card issuers how long credit lines are blocked for transactions involving hotels, motels, and rental cars. You may wish to choose an issuer that removes blocks more quickly.
If you have questions or concerns about credit card blocking, write: Credit Card Blocking, Correspondence Branch, Federal Trade Commission, Washington, DC 20580. These comments help the FTC in its law enforcement efforts.
For a copy of Best Sellers, which lists more than 100 free publications on credit and other consumer topics, contact: Public Reference, Federal Trade Commission, Washington, DC 20580; 202-326-2222. TDD: 202-326-2502.
FTC CONSUMER & SMALL BUSINESS ADVISORY - PUBLIC DOCUMENT
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