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Credit Card Blocking

If you do any traveling and reserve a hotel room or rent a car, you may have experienced 
"credit card blocking".

Credit card blocking is like a reserve or set-aside on your credit card which reduces the amount of credit available. The clerk at the hotel or car rental place will contact your card issuer with the estimated cost of your stay or use of vehicle. If approved, the available line of credit will be reduce by this amount.

For example, if you use a credit card to check into a $150-a-night hotel for five days, at least $750 will be blocked on that card. If you are near your credit limit this could be a problem if you intend to pay cash for the hotel and use your credit card for other purchases. The block is generally good for as long as 15 days.

How Blocking Can Be a Problem
Blocking is a common practice used to make sure you don't exceed your credit line (credit card) or overdraw your bank account (debit card) before checking out of a hotel or returning a rental car, leaving the merchant unpaid. Blocking is sometimes also used by restaurants for anticipated sizeable bills (like large groups at dinner or a party), by companies cleaning your home, and other businesses to ensure credit or account money will be available to complete payment.

If you're nowhere near your credit limit or don't have a low balance in your bank account, blocking probably won't be a problem. But if you're reaching that point, be careful. Not only can it be embarrassing to have your card declined, it also can be inconvenient, especially if you have an emergency purchase and insufficient credit or money in your bank account. On debit cards, depending on the balance in your bank account, blocking could lead to charges for insufficient funds while the block remains in place.

How to Minimize Blocking
To avoid the aggravation that blocking can cause, follow these tips:

• When you check into a hotel or rent a car - or if a restaurant or other business asks for your card in advance of service - ask if the company is "blocking," how much will be blocked, how the amount is determined, and how long the block remains in place.
• Consider paying hotel, motel, rental car, or other "blocked" bills with the same credit or debit 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 by check, remind the clerk you're using a different form of payment and ask them to remove the prior block promptly.
• Ask your current debit card issuer if they permit blocks, for how long, and from what types of merchants. If they do, you may want to consider getting an overdraft line of credit from your bank. Ask about a plan that always automatically covers the overdraft and does not involve a separate bank decision on whether or not to pay it each time. Although you might incur some interest on this plan if you don't pay off the amount fairly quickly, you would not have an overdraft that is not paid. Ask your bank if they offer an overdraft line of credit, how it would work, and how much it costs.

You may also contact your credit issuer and request your credit limit be raised.