Credit and debit card blocking is a common practice used by most hotels and many other businesses. The Federal Trade Commission (FTC) offers some advice on how it works and why it can become a problem.
If for example a person checks into a hotel, lets say for five days at $150 per night and wants to pay by credit card. At this stage the mathematics are easy, five nights at $150 per night is $750.
However that’s the minimum amount that will be charged to the card. On top of that there may be meals, drinks at the bar, telephone calls and all the other things that people can spend their money on in a hotel. So the bill at the end of the week could be substantially more.
Hold on Credit Card
The hotel of course wants to know that it’s going to get its money. They will estimate how much each guest is going to spend. The hotel then takes the card, contacts the credit card company and asks it if there is enough money in the account to cover the week’s stay. Then if there is, it asks the company to put a hold on the credit card for that estimated amount. That means the person cannot spend the money elsewhere.
Credit card blocking can become a problem at this stage. If the guest is not planning to spend any money other than the rate for the room and the hotel asks for a block on more than that rate, it is potentially leaving the guest, if near their limit, without funds. It’s essential therefore if a person’s near their credit card limit they must ask the hotel or other business how much they have asked the card company to hold and how long it will be in place.
Credit Card Blocking
At the end of the week a final bill is presented for the guest to pay. It’s at this stage that credit card blocking can cause other problems, some of which the Federal Trade Commission has highlighted.
