Facts for Consumers from the Federal Trade Commission

Credit Card Blocking -- March 1994

Have you ever presented your credit or charge card to a store 
clerk and been surprised when told you were over your credit 
limit?  If this happened soon after you stayed at a hotel or 
motel or rented a car, the problem may have been caused by credit 
card "blocking."

How Credit Card Blocking Works

When you use a credit or charge card to check into a hotel or 
motel or to rent a car, the clerk usually contacts your card 
issuer electronically with the estimated cost.  If the card 
issuer approves the transaction, your available line of credit is 
reduced by this amount.  This is called a "block" (or 
"authorization").

For example, suppose you use a credit card to check into a 
$100-a-night hotel for five nights.  At least $500 would most 
likely be blocked on that card.  In addition, hotel and car 
rental companies sometimes add anticipated "incidental" costs for 
such things as food, beverages, or gasoline.  These amounts can 
vary widely among merchants.

If you pay your bill with the same credit card you used at the 
beginning of the transaction, the final actual charge probably 
will replace the block within a day or two.

If, however, you use a different credit card, cash, or a check to 
pay for these services, the company that issued the credit card 
you originally presented might keep the block on for as long as 
15 days _ after you've checked out of the hotel or returned the 
car.  

This delay occurs because the first card issuer does not receive 
notice of the final charge and, therefore, is not aware that the 
transaction has been completed.  Most card issuers program their 
computers to retain for a specific number of days all blocks that 
have not been replaced by final charges.  Issuers often choose a 
10 or 15-day period because it is longer than most hotel stays 
and car rentals.  Holding blocks for this long ensures that card 
holders do not use their entire credit limit before checking out 
of the hotel or returning their rental car, leaving the hotel or 
rental car company unpaid.  The number of days that blocks are 
retained varies widely among card issuers.

Why Credit Card Blocking Can Be a Problem

Consumers who are far below their credit limit probably will not 
be affected by credit card blocking.  But for consumers with 
charges close to their credit limit, credit card blocking can 
present problems.  For example, consumers who need to use their 
cards for emergencies may find that, because of this temporary 
block, they have no credit left to use.

Those consumers who pay for their room or rental car with cash, a 
check, or a different credit card also may have problems.  They 
may find that they do not have access to the amount of the block 
for 10 or 15 days, even though they already have paid the bill in 
full. 

How to Protect Yourself 

If you do not want the aggravation that blocking can cause, you 
may want to: 

l Consider paying for all hotel, motel, or rental car expenses 
with the same credit card you used at the beginning of the 
transaction.

l Ask clerks how much is being blocked on your credit line, and 
how that amount was determined, when you check into a hotel or 
pick up a rental car.

l If you pay with a different credit card or cash, ask the clerk 
to remove the block.

In addition, when selecting among credit cards, ask credit card 
issuers how long credit lines are blocked for transactions 
involving hotels, motels, and rental cars.  You may wish to 
choose an issuer that removes blocks more quickly.

For More Information

If you have questions or concerns about credit card blocking, 
write: Credit Card Blocking, Correspondence Branch, Federal Trade 
Commission, Washington, DC 20580.  These comments help the FTC in 
its law enforcement efforts.

For a copy of Best Sellers, which lists more than 100 free 
publications on credit and other consumer topics, contact: Public 
Reference, Federal Trade Commission, Washington, DC 20580; 
202-326-2222. TDD: 202-326-2502.