Compare Best Credit Cards Offers

You may or may not be familiar with the term ‘card blocking’ but it is a pretty common practice that vendors use to ensure they are going to get paid. Card blocking is essentially the act of ‘holding’ an amount of money on a consumer’s credit or debit card as a precaution. In other words, the consumer physically has $100 in their account but a company has placed a hold on that amount, meaning the consumer can not use it.

Who Issues Card Blocks?

Any company can place a block on a credit card or a debit card during a purchase transaction. It depends on the policies of retailers and other establishments you patronize. The more common company types that have card blocking requirements are rental car agencies, hotels, and restaurants. Because of the way transactions are handled, a car block is used as a safety net. For instance, you rent a hotel room for a weekend. At the end of your stay, you can essentially leave your keys at the check in desk and go on your way. The hotel will likely place a card block on the credit card you used to check in as a way of covering the costs of any incidentals you incurred like long distance phone calls, mini-bar usage, lost keys or damage to the room.

How Blocking May Hurt

Card blocking is a necessary evil used by companies to protect from the vagaries of some of their potentially underfunded clientele. Unfortunately, however, if a consumer is left unprepared for a card block, it can hurt them financially. A consumer may have anticipated the charges for the hotel stay but if they are anywhere near their credit limits, a card block placed on the card can cause over the limit fees, overdraft charges (in the case of debit cards), and even embarrassing situations. Without the knowledge of a card block being placed on a credit or debit card, consumers may find their cards being declined until the block is released because the credit limit has been exceeded.

How To Handle a Block

When the card is blocked by a vendor, the hold can be removed in a matter of a few business days or it can be up to 30 days in some cases. It all depends on the person issuing the block. Here are some tips for effectively dealing with a credit card or debit card block:

Ask for the Rules

The only way you can play by the rules is to know what they are. In situations where you are renting a vehicle, reserving a hotel room, purchasing event tickets, or other transactions outside normal purchases, you need to ask what the protocol is for card blocking. Be specific in asking if a hold will be placed on the card and if so, how much will it be and how long it will last.

Plan Ahead

If you are expecting a credit card transaction that may involve a card block, be sure your account is in order. Pay down your balance so that you are certain you will not come close to exceeding your limits on a credit card. For debit card users, make sure you have enough cash to cover the payments, the card block amount held, and any other charges that may be incurred. Taking a chance by cutting things close likely will end up costing you a lot more cash than you have to spend.

Have Patience

You should know before the transaction occurs how long it will take until the money will be released. In the meantime, continue to plan your budget around the funds until they are again accessible to you. Don’t ‘hope’ your check will clear or that you won’t exceed your credit limits. While a company may say it only takes a day or two for a hold to be released, don’t count on it until it is actually accessible in your account.

Consider Overdraft Protection

If you frequently are subjected to credit card blocks due to travel or other necessary expenses, you may want to consider adding overdraft protection to your bank account. For credit card users, you may want to request an increase in your credit limit due to the activity on the card. Provided you are a loyal customer in good standing with on-time payments, the credit card issuer may permit such an increase.

The key to using credit cards to your advantage starts with the knowledge you have. If you have questions or concerns about how card blocks are handled, don’t hesitate to contact your credit card provider to learn more about the situation. One simple mistake can lead to a few hundred bucks in extra charges so it’s best to stay on top of the terms of your credit card.

Similar Posts:

• ATM transactions now free for Fed Bank customers
• 5 Reasons Your Card Might Get Blocked
• Serve – New Alternative to PayPal, and It’s From (Gasp) American Express
• The Federal Reserve Clarifies Rules to Project Credit Card Consumers
• Control Your Budget – With A Little Help From Your Credit Card

Tags: Blocking, Card Blocking