What You Should Kow About Credit Card Blocking

Credit card blocking is one of those annoying little facts of life that only serves to disrupt our finances. Unfortunately, there isn't much that can be done about it unless you decide never to make purchases for which your credit card might potentially be blocked. Usually, a company will block your credit card for an estimated amount of your final payment for goods or services. It is especially common whenever you rent something, such as a car or a hotel room.

Why is Credit Card Blocking Used?
Credit card blocking is a way for merchants to ensure that they will be paid. Since credit cards have credit limits, you could easily use your credit card to rent a car and then make sufficient purchases to reach your credit limit. Then, when the car rental company runs your card for the final bill, it will be denied and they may not be paid for your rental.

Is Credit Card Blocking Legal?
Absolutely. As long as the amount of the block is comparable to the estimated actual charges, it is perfectly legal.

How Does the Company Decide How Much to Block?
Credit card blocking is used as a way to safeguard the estimated funds it will cost for the goods or services. For example, let's say that you've rented a car for three days at a rate of $59 per day. The rental car company might then charge your credit card for $177, which is the amount of a three-day rental. Your final charges may be more or less than the amount blocked on your credit card (i.e. if you turn the car in early or if you go over the alotted miles), but the credit card blocking allows the company to ensure that they will be paid at least a close estimate of what they should be paid.

When Will a Credit Card Block be Removed?
In most cases, the credit card block will be removed from your account right after the final payment is assessed (usually within 48 hours). Sometimes the two charges will overlap, and you will be charged an overlimit fee by the bank if the blocked charge and the final payment exceed your credit limit, so make sure to use a card that has sufficient available credit. If the charge isn't removed for any reason, you should contact both the merchant and your bank to get the situation resolved as quickly as possible.

How Will I Know if a Company Uses Credit Card Blocking?
The best thing to do is to ask. When you hand over your credit card to make a reservation or purchase, simply inquire about credit card blocking policies. The company is required to let you know if an estimated charge will be blocked on your card. You can also ask them how long the charge will remain on your card.

How Can I Prevent Overlimit Fees with Credit Card Blocking?
If you are concerned about exceeding your credit limit because of credit card blocking, it might be best to use more than one card. Save one card (the one with the lower limit) for smaller purchases that you make while traveling, for example, and use the card with the higher limit for reservations or purchases that might incur credit card blocking charges.

Source: Associated Content