When a business such as hotel 'blocks' or keeps your credit card on hold for
certain amount while you avail the services of the hotel or business is termed
as credit card blocking. It must be sounding rather confusing, perhaps the example
below will make things more clear.
When a person checks into a hotel and uses his/her credit card for registration,
the booking clerk contacts the credit card company and depending on your estimated
stay will tell the credit card company about your bill. Now, the credit card
company confirms whether your credit card actually has the ability to pay the
sum or not. If the answer is in affirmation the booking clerk will add other
expenses such as travel, and utility to your bill and keep the entire amount
Credit card block is pretty much useful for travel and business companies,
because it helps them get paid for their services and check fraudulent credit
card misuse. But, it hurts the credit card holder in more than one ways.
First, the amount blocked during any such activity is usually much more than
the actuall bill. The hotels and travel agencies try to include every single
expenditure in it to safeguard their interest. This thing can severly limit
your ability to pay for other things with the credit card.
Secondly, if one of your credit card is blocked and incidentally you pay off
the hotel or other bills with another credit card, the blocked credit card will
remain in that state for anything between 10-15 days. The reason simply being
that the credit card company doesn't know that the dues are cleared and the
block should be removed. Again this will limit your spending ability.
These things can be avoided if a person takes proper measures. The first thing
to do is to ask the booking agent about the amount of money blocked on the credit
card, and how did they calculate that amount. Secondly, always pay your bills
with the same credit card that was used for registration purposes. It will automatically
save you from the hassles of getting the credit card unblocked. If for any reason,
you have to pay with another credit card, ask the booking clerk to get the previous
credit card unblocked, and verify that it was done properly.
Credit card blocking is somewhat good for the credit card holder in a sense
that it doesn't allow him to cross spending limits with his credit card and
cause unnecessary billing related problems for the hotel or travel company.
However, credit card by their inherent nature are instruments to provide financial
support during emergencies. By keeping a check on the credit card block, one
can ensure that the unexpected financial demands are met easily with the credit