#

Understanding Hotel Credit Card Holds

As a travel enthusiast and credit card rewards maximizer, I spend a significant amount of time on the road. One thing that consistently pops up, and often frustrates even seasoned travelers, is the infamous hotel credit card hold. When you check in, the hotel will likely ask for a credit card to keep on file. In addition to the cost of your stay, they will also place a temporary authorization hold on your card. These holds can significantly impact your available credit, especially during a long trip. So, what are these holds, why do hotels use them, and why do they sometimes linger longer than expected? Let’s dive into the details.

#

What Exactly is a Credit Card Hold?

Firstly, it’s important to understand what a credit card hold actually is. Think of it as a pre-authorization, where the merchant (in this case, the hotel) asks your credit card issuer to reserve a certain amount of your credit line. This ensures that funds are available to cover the final bill. This differs from a traditional transaction where funds are immediately transferred from your account to the merchant. Credit card holds are common in various industries. For example, car rental companies and gas stations frequently employ them. However, hotel holds often stand out due to their potentially larger amounts and the time it takes for them to clear.

Essentially, the hotel wants to protect itself against potential costs beyond just the room rate. These can include incidentals, room service, minibar purchases, or even damage to the room. The hotel doesn’t know the final amount you’ll owe until you check out. Therefore, they place a hold to guarantee they can cover any additional expenses you may incur.

#

Why Hotels Rely on Credit Card Holds

Hotels don’t implement credit card holds to inconvenience you; they’re a necessary part of their payment processing system. Payment networks, like Visa and Mastercard, often require these holds, especially when the final transaction amount is uncertain at the beginning of the service. Imagine a scenario where a guest racks up a substantial bill for room service and damages the room. Without a hold in place, the hotel risks the guest not having sufficient funds to cover the charges, potentially leading to a chargeback.

These holds essentially mitigate the risk for the payment networks as well. By ensuring available credit, they reduce the likelihood of transactions being declined due to insufficient funds. Therefore, these holds protect the hotel and the payment network against potential financial losses. It’s a safety net ensuring that the hotel gets paid for all the services provided during your stay.

#

The Lingering Question: Why Do Holds Take So Long to Clear?

Now, the most frustrating part: the waiting game. Ideally, the hotel hold should disappear shortly after you check out. Often, the hold is released within 24 hours. However, in some cases, it can take several days, even up to a week or more, for the hold to be removed from your account. So, why the delay?

While you might be quick to blame the hotel, the responsibility typically lies with the credit card issuer. Payment networks set the maximum timeframe for holds. For example, Visa allows holds to last for up to 30 days. On the other hand, American Express typically limits holds to seven days. However, even within these network guidelines, individual credit card issuers have their own policies and procedures for processing holds.

The process works like this: After you check out and settle your bill, the hotel sends a request to your credit card issuer to release the hold. But even with this notification, the issuer might still take a few days to remove the pending charge from your account. This delay can be due to internal processing times or simply the way the issuer handles authorizations.

#

My Personal Strategies for Minimizing the Impact of Hotel Holds

Over the years, I’ve developed a few strategies to minimize the impact of hotel credit card holds on my travel spending power. Here are a few things I do:

* Use a Credit Card with a High Limit: This might seem obvious, but having a credit card with a generous credit limit can make a big difference. If you have plenty of available credit, the hold is less likely to significantly impact your spending power during your trip. I love my Chase Sapphire Reserve card for this reason. It provides a high credit limit and earns valuable Ultimate Rewards points on travel and dining.

* Inquire About the Hold Amount: Before you check in, ask the hotel about the estimated hold amount. Knowing this upfront allows you to better plan your spending and adjust your budget accordingly. I always call ahead to confirm and sometimes even negotiate a lower hold amount, especially for longer stays.

* Use the Same Card for the Hold and Final Payment: I’ve found that using the same credit card for both the initial hold and the final payment can expedite the release of the hold. When you use different cards, the system might take longer to reconcile the initial authorization with the final charge.

* Pay Attention to Your Credit Card Statements: Keep a close eye on your credit card statements and online account activity. If the hold hasn’t been released within a reasonable timeframe (typically a few business days), contact your credit card issuer directly. They can investigate the matter and help expedite the removal of the hold.

* Consider Using a Travel-Specific Credit Card: Many travel credit cards offer benefits that can help mitigate the impact of hotel holds. Some cards provide purchase protection, travel insurance, and other perks that can come in handy when dealing with unexpected expenses. Furthermore, I like to use a travel credit card when paying for hotels because I often receive additional points for doing so.

* Communicate with the Hotel: Before checking out, confirm with the front desk that they have released the hold. Get the name of the person you spoke with and note the time and date. This can be helpful if you need to follow up with your credit card issuer later.

#

Alternative Payment Options (With Caveats)

While I generally advise against it for the sake of earning rewards, there are alternative payment methods you could use to avoid credit card holds altogether. However, each comes with its own drawbacks:

* Cash: Paying with cash is the only guaranteed way to avoid a credit card hold. However, you’ll miss out on valuable credit card rewards, and carrying large amounts of cash can be risky.

* Debit Card: Using a debit card might seem like a solution, but it’s generally not recommended. Debit card holds can tie up funds directly from your bank account, potentially leading to overdraft fees or other issues. I personally avoid using my debit card for hotel stays due to the risk of impacting my available cash.

#

Bottom Line: Navigating Hotel Credit Card Holds Like a Pro

Hotel credit card holds are an unavoidable part of travel for those of us who want to maximize our rewards. While they can be frustrating, understanding why they exist and how to manage them can make the process much smoother. By using a credit card with a high limit, inquiring about the hold amount, using the same card for both the hold and final payment, and closely monitoring your statements, you can minimize the impact of these holds on your travel spending power. So, next time you check into a hotel, remember these tips and travel with confidence!