How To Avoid Credit Card Blocking
What's your credit card doing behind your back? If you don't know what credit card blocking is, you should, to avoid becoming a victim of it. And you can be sure that you are going to be stuck with a huge credit card block when you're travelling, you need access to that credit and you absolutely least expect it. Bang. Now you're really stuck!
It usually plays out like this. You are travelling outside North America, you go to use your Visa debit card and you are ... gulp ... denied access.
You immediately call your bank to find out what's going on. The person on the other end of the telephone tells you that you don't have enough money in your account. "What? That couldn't be!," you say (you're always on top of your transactions).
The bank employee tells you that $500 extra was taken out of your checking account by the hotel where you recently stayed; your bank is also slamming you with several overdraft charges in the meantime.
You think this is insane, but do remember that you used your debit card at the hotel where you stayed for three nights. So you call the hotel, and you find out from the accounting department that what they did is actually very common among hotels and car rental companies: It's called credit card blocking. Unfortunately in your case, your debit card was mistaken for a credit card.
Essentially, credit card blocking is the service provider's way of guaranteeing you don't exceed your credit line before checking out of a hotel (or any other service that needs a reservation), leaving it unpaid. In doing so, the company holds onto your money, amounting to different sums, depending on how long you used the service, for up to 15 days and then replenishes it. Regardless if you had any other application for that part of your credit line during that two week (or longer) period, then you'd better figure out somewhere else to get the money as for that time it's unobtaininum!
And remember, it's not just for debit cards, as credit cards get hit just as often!
How it Works
For example, if you checked into a hotel that was $200 per night, and you stayed for five nights, then the block would likely be at least $1,000. Plus, hotels and rental car companies often include what are considered additional estimated "incidental charges" for food, beverages or gasoline. Just try renting a car in Europe. For a $75 one day rental, some rent a car companies will block over $3,000 on your credit card for as long as three weeks!
Be especially aware of rental car companies which are based outside North America as they are generally rapacious and avaricious. They will try to hit you with as much as $50 a day in additional insurance coverage. Should you wisely refuse to pay those atrocious insurance premiums then if you park that car somewhere that it gets a mild "keying" type scratch on one door panel, you will see at least $3,000 vanish from your credit card balance... and not due to a block, but to pay for the damage! Where are these rental car companies getting their bodywork done? At Tiffany's?
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