The BBC’s MoneyBox radio programme recently featured details of a little known practice which can affect the level of credit available on your credit card.
When checking in to a hotel, the hotel may scan your card, and secure an amount of credit from the card to cover the price of the room for however many nights you’re staying for, plus some more for “extras”. The money isn’t actually taken from the card until you check out of the hotel, when the correct amount is finally taken, and any credit that was secured over and above the actual amount is made available.
This practice came to light when one of the programme’s listeners told them about it happening whilst he was on holiday; he booked into one hotel, where they secured an amount of credit from his card. He then decided he wanted to stay somewhere else, and the second hotel also secured some credit. When he then came to make a purchase on his card, he found that he had run out of credit.
It appears that this is standard practice (and actually, it makes sense that it does happen). In the example where this came to light, it was largely down to the person being booked into 2 hotels at the same time which exacerbated the problem – this probably doesn’t happen too often, but it’s certainly worth knowing about, as it could cause problems for example, if you use your card on holiday, and have no other form of money available.
It shouldn’t be a problem for most people as the CC companies are overly generous with credit lines… unless you’re carrying big balances in which you might have other problems to worry about.