“Credit card holds accepted.” Almost every hotel website displays this under their price and reservation section. But what does that exactly means? Read on…
What is a credit card hold?
Booking a room using debit or credit card hold simply means that you provide your card details to the hotel and they reserve a room for you WITHOUT actually charging your card. However, the hold is approved by your bank so the hotel can be sure that you have enough limit to pay.
What happens to your card limit when you use it to hold a room?
Though a hold doesn’t charge your card immediately, the credit limit for that amount is blocked on your card. If you are using a debit card, the hold will block money available for withdrawal or spend in your account. So if you have a limit of 1000 and 500 is the hold amount, only 500 would be available for you to use. Don’t be surprised if your card is refused at a merchant outlet even when you didn’t spend. That money isn’t available until the hold is lifted, and that could take as much as a week after the hotel clears it. However, some hotels can release your block immediately after you clear the bill.
How is it better than other methods of reservation?
It’s better because you are not paying in advance. It’s just a hold. For example, if you are getting a good rate 2 months in advance, you can block the room (and the rate) without actually paying till your stay is over.
Credit card holds are also good for tentative bookings in cases where a cancellation window is available. Say you are planning to go on a holiday but not sure if your leave would be approved, book a hotel that allows you to use credit card hold. Later if your leave is not approved, you can simply cancel it without any money exchanging hands. If your leave is approved, enjoy that special rate you grabbed in advance.
How does it help hotels?
Even though hotels are not charging you, they CAN charge whenever they want as the amount is already approved. It’s a security for them that in case you fail to clear the bills, they will convert that hold into a transaction and recover their money.
What if you cancel the stay or don’t show up?
Credit card hold is different from call and reserve without payment. In case you cancel your stay or don’t show up, the hotel has the right and it will recover the money from your card. It’s always better to inform the hotel in advance and have the cancellation confirmation on email/sms etc.
Credit card hold vs Debit card hold.
Although they sound similar, there is a lot of difference between them. Credit cards generally have a higher limit, so even after a hold there are fewer chances that you will max out on your limit. However, it’s not the same with debit cards. You are actually blocking your cash. And it’s not a good idea to not be able to access cash in your account, especially while traveling. Even worse, if you are booking months in advance. Your cash would be blocked for that long. Plus releasing holds can take some time even after you checkout.
Can I pay through a different card?
Yes, credit card hold is just a security. You may choose to settle your bill using a different card or even cash. But make sure the hotel releases the hold before you leave.
Smart way of using credit-card hold.
I keep a separate card with a higher credit limit just for blocks. I never end up with any bill on that card but at least I don’t block limits on my regular use credit card. Debit card for holds is a bad idea unless you have tons of cash lying in your account.
How to book a hotel using credit-card hold.
Most hotel websites, tele-bookings and some sites like booking.com let you block hotel rooms with your credit card.