Card "Blocking" Can Cause Hassles

If you have recently made a large purchase using your debit or credit card, be aware that a "block" could be placed on those accounts. According to the Federal Trade Commission (FTC), when you use a credit or debit card to check into a hotel or rent a car, the clerk usually contacts the company that issued your card to give an estimated total. If the transaction is approved, your available credit (credit card) or the balance in your bank account (debit card) is reduced by this amount. That is a "block." Some companies also call this placing a "hold" on those amounts.

Blocking is used to make sure you do not exceed your credit line (credit card) or overdraw your bank account (debit card) before checking out of a hotel or returning a rental car, leaving the merchant unpaid. Restaurants sometimes use blocking for anticipated sizeable bills (like a large group dinner or a party), by companies cleaning your home and other businesses to ensure credit or account money will be available to complete payment.

Blocking can sometimes cause you, the cardholder, aggravation and embarrassment. By using your debit or credit card after a block has been placed on your account, future transactions can be declined or you could go over your credit card limit. To avoid such hassles the Better Business Bureau, along with the FTC, offer these tips:

* When you check into a hotel or rent a car - or if a restaurant or other business asks for your card in advance of service - ask if the company is "blocking," how much will be blocked, how the amount is determined and how long the block remains in place.

*Consider paying hotel, motel, rental car, or other "blocked" bills with the same credit or debit card you used at the beginning of the transaction. Ask the clerk when the prior block will be removed.

* If you pay with a different card, by cash, or by check, remind the clerk you are using a different form of payment and ask them to remove the prior block promptly.

* Ask your current debit card issuer if they permit blocks, for how long and from what types of merchants. If they do, you may want to consider getting an overdraft line of credit from your bank. Ask about a plan that always automatically covers the overdraft and does not involve a separate bank decision on whether or not to pay it each time. Although you might incur some interest on this plan if you do not pay off the amount fairly quickly, you would not have an overdraft that is not paid. Ask your bank if they offer an overdraft line of credit, how it would work and how much it costs.

This report is general in nature and not intended as a reliability report on any company, service or product.