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What Can You Do About Credit Card Holds?

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When you pay with cash, you either have enough to cover the purchase or you don’t. But with credit cards, it’s different, since when you make charges, merchants can place a hold on your account, rendering part of your credit line unusable. This happens most often at hotels, car rental agencies and cruise lines.

What is a credit card hold?

Companies place a hold on your account to protect against potential damage and to ensure you don’t skip out on any additional charges you authorize. Hotels and auto rental agencies need to protect against guests who may damage rooms or cars, while cruises and hotels want the assurance that you can cover any food, beverages and entertainment costs charged to your room.

For example, if you use your card after checking into a Marriott hotel using a digital key, the first night’s charges will be applied to the credit card on file. After checking in, your card issuer will place a hold on your debit or credit card to cover room and tax charges, resort fees and $50 for incidentals per day for your entire stay. The hold will stay in place for up to five business days after you check out.

And if your card’s credit line isn’t very big or you’re already close to maxing out the card, holds can result in your card being declined when trying to pay for an item. We’ll explain how you can either avoid these holds or help minimize their effect.

How to handle a hold

The key to managing credit card holds is to know before you go. Each card issuer has its own guidelines, so it’s a good idea to check with them on their policies before using it for hotels, rental cars or cruises. Wells Fargo notes that transactions at some merchants (such as hotels, car rental companies, restaurants, and gas stations) may result in temporary authorizations for more than the actual purchase amount. This will make less credit available on an account for “several days,” usually until the actual purchase amount is received from the merchant.

Here are five tips on how to effectively manage credit card holds:
  1. Ask about credit card holds. Before you check into a hotel, rent a car or board a cruise ship, ask about their credit card hold policies. For example, ask if a hold will be placed on your card, how much will be held, how is the hold amount determined, and how long the hold will last. After getting answers, you can check your card’s available credit and plan accordingly.
  2. Know your available credit and balance. Cardholders need to know how much available credit is on their card before using it at a outlet where holds are commonplace. If your balance is close to the available credit limit, you’ll either need to pay down the balance substantially before using it where a hold might be placed or use another card where there is plenty of room to handle a hold.
  3. Pay with the same card. It’s helpful to pay for services that do implement holds with the same credit or debit card you used at the beginning of the transaction to remove the hold as quickly as possible. And don’t forget to ask when the block will be removed. If you use one card to book the reservation, but pay with a different card or by cash, remind the vendor you’re using a different form of payment. Then ask them to remove the hold on the original card.
  4. Avoid tying up too much of your credit line. Credit card users with multiple accounts should use a card with the largest amount of unused credit when booking hotels, cars and cruises. Cardholders can also request a credit line increase on a card. Some companies will accept a deposit using cash or a debit card, although any alternate card is also subject to holds. It helps to have a second card handy, especially when traveling, in case a hold restricts your ability to use the primary card for ancillary expenses.
  5. Try to get the hold removed quickly. One of the worst parts of a credit card hold by a hotel or an auto rental company is that it can remain for several days after you’ve checked out or returned the car. Try asking for the hold to be cleared immediately after receiving your final bill. In some cases, the company may be able to contact the card issuer and have the hold released. With Wells Fargo, for example, authorized holds are dependent on the merchant and the timeframe for a release can vary. Customers are encouraged to reach out to a bank representative or the merchant who place the hold with any concerns.

The bottom line

Credit card holds protect certain vendors against unscrupulous travelers who will try to avoid paying for services received or damages caused. Not being aware of holds can cause headaches for cardholders who don’t have enough available credit on their cards.

Be prepared by keeping your balances low and carrying an alternate card for other expenses. Another option is to request a credit limit increase on the card you’ll be using for certain services that charge holds.

When travelers understand how credit card holds work and take steps to minimize the disruption, they can continue to enjoy the security and convenience of using credit cards while traveling without fear of having them declined.