FTC FACTSfor Consumers

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FEDERAL TRADE COMMISSION FOR THE CONSUMER

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H

Credit and Debit Card

Blocking

ave you ever been told you were over your credit card limit, or

had your debit card declined, even though you knew you had

available credit, or money in your bank account? If this happened

shortly after you stayed in a hotel or rented a car, the problem

could have been card ìblocking.î

WHATíS BLOCKING?

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. Thatís a ìblock.î

Some companies also call this placing a ìholdî on those amounts.

Hereís how it works: Suppose you use a credit or debit card when you check

into a $100-a-night hotel for five nights. At least $500 would likely be blocked.

In addition, hotels and rental car companies often add anticipated charges for

ìincidentalsî like food, beverages, or gasoline to the blocked amount. These

incidental amounts can vary widely among merchants.

If you pay your bill with the same card you used when you checked in, the final

charge on your credit card, or final amount on your debit card, probably will

replace the block in a day or two. However, if you pay your bill with a different

card, or with cash or a check, the company that issued the card you used at

check-in might hold the block for up to 15 days after youíve checked out.

Thatís because they werenít notified of the final payment and didnít know you

paid another way.

WHY BLOCKING CAN BE A PROBLEM

Blocking is used to make sure you donít exceed your credit line (credit card) or

overdraw your bank account (debit card) before checking out of a hotel or
Federal Trade Commission

Bureau of Consumer Protection

Office of Consumer and Business Education

June 2003

F C EDERAL RADE OMMISSION T FTC OR HE ONSUMER

1-877-FTC-HELP www.ftc.gov

Facts for Consumers

returning a rental car, leaving the merchant

unpaid. Blocking is sometimes also used by

restaurants for anticipated sizeable bills (like

large groups at dinner or a party), by companies cleaning your home, and other businesses

to ensure credit or account money will be

available to complete payment.

If youíre nowhere near your credit limit or

donít have a low balance in your bank account,

blocking probably wonít be a problem. But if

youíre reaching that point, be careful. Not only

can it be embarrassing to have your card declined, it also can be inconvenient, especially if

you have an emergency purchase and insufficient credit or money in your bank account. On

debit cards, depending on the balance in your

bank account, blocking could lead to charges

for insufficient funds while the block remains

in place.

HOW TO AVOID BLOCKING

To avoid the aggravation that blocking can

cause, follow these tips:

ï When you check into a hotel or rent a car

ó or if a restaurant or other business asks

for your card in advance of service ó ask if

the company is ìblocking,î how much will

be blocked, how the amount is determined,

and how long the block remains in place.

ï Consider paying hotel, motel, rental car, or

other ìblockedî 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.

ï If you pay with a different card, by cash, or

by check, remind the clerk youíre using a

different form of payment and ask them to

remove the prior block promptly.

ï 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 donít 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.

In addition, if you are considering a credit or

debit card, shop around. When comparing

credit and debit card offers, ask issuers if they

permit blocks, for how long, and from what

types of merchants. You may want to consider

an issuer that uses shorter blocks.

FOR MORE INFORMATION

The Federal Trade Commission (FTC) works

for the consumer to prevent fraudulent,

deceptive and unfair business practices in

the marketplace and to provide information

to help consumers spot, stop and avoid them.

To file a complaint or to get free information

on consumer issues, visit www.ftc.gov or call

toll-free, 1-877-FTC-HELP (1-877-382-4357);

TTY: 1-866-653-4261. The FTC enters

Internet, telemarketing, identity theft and

other fraud-related complaints into Consumer

Sentinel, a secure, online database available to

hundreds of civil and criminal law enforcement

agencies in the U.S. and abroad.