Credit card blocks
lower your available credit
sure to put a damper on any holiday.
Two days into
your long-awaited vacation and a snooty waiter is telling you that he cannot accept
your credit card.
were nowhere near your limit when you left home 48 hours earlier. How can this
Blame it on a practice known as credit
card blocking. Some merchants, such as hotels and rental car agencies, block out
anticipated charges in advance.
and your local gas station can and do put blocks on your account.
occur any time the end amount of a purchase is not known at the time a card is
authorized," says Kenny Thomas, director of corporate relations at Visa U.S.A.
Register at a hotel and a rental car agency with
the same credit card and the full amount of each bill and then some, often 20
percent more, is automatically blocked off on your card. Even a roomy credit line
can fill up fast.
"Most people don't know about
it, and they only find out about it when they're really upset," says E. Thomas
Garman of The InCharge Institute and author of more than 26 books on personal
Say you check in for two weeks at a hotel.
The hotel will automatically block off two weeks' worth of charges plus incidentals
such as room service, phone calls from the room etc. on your card.
you get a rental car that same day. The agency will block out the full charges
for a two-week rental plus a little extra for gasoline.
considerable chunk of your credit line is eaten up before you've even unpacked
"The rental car agency is afraid you're
going to wreck the car. The hotel is afraid you're going to steal stuff or rack
up expensive phone calls," Garman says. "Neither one is going to change
their policy because you can't pay for your dinner."
The best way to avoid such an embarrassing situation
is to travel with a spare credit card.
always a good idea to carry at least two credit cards. Carry one as a primary
card and one as a backup," says Steve Rhode, a co-founder of Myvesta.org.
Credit card blocks usually disappear shortly after
you check out of a hotel or return a rental car. If you pay with the same credit
card you checked in with, the block will disappear from your credit line within
a day or two and the exact transaction amount will be charged to your card.
hold is released as soon as the final transaction is cleared and that's usually
within 24 hours," Thomas says. "Visa policy requires merchant holds
last no more than 72 hours after the final transaction takes place."
But if you end up paying with a different credit card
or by cash or check, there's a chance a block could linger on your credit line
for as long as two weeks. The reason? The merchant forgot to release the initial
hold on your credit card after you paid your bill by another means.
you pay with check or cash, remind them to remove the block when you leave,"
says Carole Reynolds, a senior attorney with the Federal Trade Commission. "You
don't want to be charged twice."
Be sure to
check with your credit card company to make sure the block is really gone.
about 'transactions pending but not yet posted,'" Rhode says. "The credit
line minus the credit card balance should equal available credit. When it doesn't,
the difference is blocks on your card."
credit card blocks tend to pop up when you're doing a lot of traveling. But it's
important to realize that smaller credit blocks happen all the time. Restaurants
When you hand the waiter your credit card,
he will automatically block off the price of the meal plus a 20 percent tip. The
block is then reconciled with the amount you decide to pay when you sign the receipt.
Credit card blocks even happen at gas stations. Think
about how you pay at the pump. First you swipe the card and then you fill up.
After you swipe your card, the gas station blocks out say, $50, from your credit
line and then you're allowed to start fueling.
you charge $15 worth of gas. The difference between the hold and the actual purchase
amount is $35. That $35 will be released from your credit line in a day or so.
Because blocks are usually gone by the time a person
gets a credit card bill, few people know anything about them -- even the fraud
investigators at some banks.
A Maryland couple learned
this lesson the hard way after a gas station blocked $75 from a joint credit card
The husband was using the card while on
business in Greece. Back home, the wife used the credit card to fill up at an
Amoco station. The price of the transaction was $22.53. Amoco blocked out $75.
When she got home, she received a call from her bank's
fraud department wanting to know if she just spent $75 at an Amoco station. The
wife said "no." So the fraud department disconnected the card. The husband
got stuck in Greece without a credit card.
were fooled by it," says Eric Friedman, Chief of the Divison of Consumer
Affairs with Montgomery County Consumer Affairs in Maryland. "They stranded
this poor guy in Greece."
Merchants are also able to place holds or blocks on consumer
debit cards. While no money actually leaves your checking account, a block does
affect your available balance.
Say you have $100
in your checking account and you use your debit card at a gas station. The station
blocks out $75 and you purchase $10 worth of gas. Until that block is cleared,
your available balance will be just $25, instead of $90. You could find yourself
overdrawn and eating some substantial fees in no time. If this happens to you,
be sure to call your bank and explain the situation.
a hold causes them a problem, they should discuss that with the issuing bank and
ask them for relief on the fees," Thomas says.
who are close to their credit limits or maintain low balances in their checking
accounts should be mindful of blocking when they make purchases.
bring an extra credit card when you travel.
to ask hotels and rental car agencies about their blocking policies. When you
register find out how much money will be blocked on your card. Remind them to
remove the block when you leave the hotel or return the car.
with your bank to see that the block has been removed.