A credit card block reduces your available credit limit by the estimated amount of a transaction. Credit card blocks are typically used by merchants when the final purchase amount is unknown at the time the card is presented for payment.
Discover the details of how credit card blocks work, read examples of them, and find out how different banks handle them.
Definition and Example of a Credit Card Block
A credit card block reduces your card’s credit limit by the estimated amount of a transaction. They typically come into play when you use your credit card at merchants such as hotels and gas stations.
A hold will be placed on your card for the nightly room rate for the length of your stay when you use your card to check into a hotel. A hold might also be placed for anticipated costs such as food and beverages.
Your card will be charged for the actual amount you spend. The block should fall off your card shortly after you check out and your bill is finalized.
- Alternate name: Credit card hold
For example, hotels use credit card holds to make sure that you have enough available credit on your card to cover the final bill.
How Credit Card Blocks Work
Due to the nature of their businesses, some merchants don't know the final amount of a customer's purchases until after their credit card has been presented for payment. Examples include hotels, gas stations, and car rental agencies. When you check in to a hotel, for example, the hotel doesn’t know how much you’ll spend on room service, laundry, or food at the property’s restaurants and bars—or if you’ll have to pay for damages to your room.
Because merchants can’t predict what you’ll spend, they estimate the final amount and place a credit card block on customers’ cards for that amount. This protects them against customers not having enough credit available to pay for the final transaction. These blocks reduce customers’ available credit limits. They ensure that the card will be good for payment when the transaction is finalized.
The temporary hold amount will drop from the card within one to two days after the final charge is made on the card. This can create complications for customers when they present one card initially, then another card for the final transaction amount. In this case, the merchant would place a block on the first card but charge the final bill to the second. No final charge would be charged on the first card, so the credit card block would remain until it expires. This could be as long as 15 days.
Credit card blocks are most common at merchants such as hotels where a significant amount of time passes between the time the block is placed and the time the final transaction amount is charged.
Different banks may have different policies surrounding credit card blocks. Be sure to ask your bank or credit union about their blocking policies if you’re concerned, because some institutions can be more customer-friendly than others.
It’s also important to ask the merchant if they can process a reversal for the initial block should you find yourself at a hotel or another merchant and need to present a different card for final payment. Speeding up the expiration of a block in this scenario is important because prolonged blocks could result in declined payments.
- If you use your credit card to make a purchase and the final transaction amount is not yet known, a merchant may have a credit card block placed on your card, reducing its credit limit by the estimated amount of the transaction.
- Credit card blocks are typical at gas stations, hotels, and rental car agencies.
- Your card is charged for the final amount, and the credit card block releases within one to two days after the transaction is finalized.
- Ask the merchant to release the hold on the card you presented initially if you use one card when the transaction amount is estimated and another card to pay for the final bill. Otherwise, you may have to wait up to 15 days for the block to fall off the first card.
- Different banks may have different policies regarding how long credit card blocks can last and who can place them.