Credit and Debit Card Blocking –
What is it and how does it affect you?
Has your debit or credit card been declined when there are sufficient funds in your account to cover the transaction? If this has happened shortly after staying in a hotel or renting a car, the problem could have been caused by card “blocking”.
What is card blocking?
When using a credit or debit card to check into a hotel or rent a car, for example, the clerk usually contacts the credit card company to give an estimated total. If the transaction is approved, the available credit (or the bank account balance in the case of debit card) is reduced by this amount. This is what's known as a “block” or a “hold” on the specified amount.
Here's an example. If you use a debit or credit card when you check into a $150-a-night hotel for 4 nights, most likely $600 would be blocked. In addition, hotels and rental car companies often add anticipated charges for incidentals to the blocked amount. These amounts can vary widely among merchants. If you pay your bill with the same card you used initially, the final charge will probably replace the block in a day or so. However, if you pay your bill with a different card, 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--because they weren't notified of the final payment and didn't know you paid another way.
Why is blocking used?
Merchants use blocking to make sure consumers don't exceed their credit limits or overdraw their accounts, leaving them unpaid. If a customer is nowhere near his or her credit limit or doesn't have a low balance in his or her account, blocking probably won't pose a problem. However, if a customer is reaching that point, he or she should be careful. Not only is it embarrassing to have a card declined, it can be inconvenient. The other problems that can result from blocks placed on debit cards include returned checks or debits, and charges for insufficient funds.
How to avoid blocking
- When you check into a hotel or rent a car, ask if the company is “blocking”, how much will be blocked, how the amount is determined and how long the block remains in effect.
- Consider paying hotel, rental car or other “blocked” bills with the same 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 check, remind the clerk you're using a different form of payment and ask them to remove the prior block promptly.
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