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Credit Card Blocking

Credit Card Blocking

Have you ever heard of credit card blocking? Have you ever tried to use your debit or credit card and been told that there was insufficient funds to make the transaction even though you knew there was enough money in the account? That is the result of “Blocking”.

It works by placing a designated amount of money on hold in anticipation of certain authorized expanses. For example, if you use your credit or debit card to rent a car for a week the rental company will run a charge through basically putting a hold on the entire balance of the charges. They may even add on other incidental charges. The total amount blocked or placed on hold varies widely depending on the company. Another example. Let’s say you checked into a hotel for a five-night stay at $100 per night. The hotel would place a block on at least $500. In any particular case this may or may not be ok.

If you pay your bill with the same credit card that was blocked then you will be ok. The charges will come out and the block removed in a couple of days. If however you reserved the room on one credit card, but paid with cash or another card, the card company would see neither money come out nor a release of funds. This could be a big problem if, after paying for your room on one card you try to make a purchase with the card that was blocked. A display of insufficient funds would appear and that hold can be in place for up to 15 days.

Even if the money is in your bank account, if it is blocked, it is as though it is not there. Additional purchases over the limit, or in excess of the balance minus the blocked amount, will be charged to your account as over-limit fees or insufficient funds charges.

To avoid problems related to blocking follow some of these tips.

• Ask your bank to explain their blocking policy to you. Ask if they allow blocking, and if so for how long can the block be placed, and from what kind of merchants.

• When you rent a car or check in to a hotel ask what their blocking policy is, how much will be blocked, and how long that block will remain in place. 

• Pay for services with the same card that you made reservations or checked in with. 

• If you made reservations or checked in with one card, but paid with another means, remind the clerk or agent to release the block on your other card. 

If you ever have problems or questions about blocking you can call the FTC (Federal Trade Commission) which is the agency set up to protect consumers from fraud and unfair business practices. You can get free information by calling (877) FTC-HELP, or visit www.ftc.gov on line.

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