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Credit Card Blocking
Facts for Consumers from the Federal Trade Commission
Credit Card Blocking -- March 1994
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."
How Credit Card Blocking Works
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have not been replaced by final charges.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.
Why Credit Card Blocking Can Be a Problem
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.
How to Protect Yourself
If you do not want the aggravation that blocking can cause, you
may want to:
l Consider paying for all hotel, motel, or rental car expenses
with the same credit card you used at the beginning of the
transaction.
l 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.
l 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.
For More Information
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.
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