Understanding Credit Card Holds at Hotels
Understanding Credit Card Holds at Hotels
Checking into a hotel is usually an exciting moment, the start of a trip or a relaxing getaway. But sometimes, the check-in process involves a bit of financial maneuvering that can leave you scratching your head: the credit card hold. It is quite a normal procedure and the credit card holds limit depending on the length of your stay as well as the price of your hotel room. Different hotel, different credit card holds policy.
Have you ever noticed a temporary charge on your credit card statement after checking into a hotel, even before you’ve paid for your stay or any extras? That’s a credit card hold in action. While it might seem a bit perplexing, it’s a standard practice in the hospitality industry designed to protect the hotel and ensure a smooth transaction at checkout.
So, what exactly is a credit card hold, and why do hotels do it? Let’s demystify this process.
What is a Credit Card Hold?
A credit card hold, also known as a pre-authorization, is a temporary hold placed on a portion of your available credit limit by the hotel. It’s not an actual charge, but rather a reservation of funds. The hotel essentially tells your credit card company that a certain amount of your credit line is earmarked for potential charges.
Think of it like this: when you make a reservation at a popular restaurant, they might ask for your credit card details to secure the booking. If you don’t show up, they might charge a no-show fee. A hotel credit card hold serves a similar purpose, ensuring that funds will be available to cover the cost of your room, taxes, and any potential incidentals.
Why Do Hotels Implement Credit Card Holds?
There are several key reasons why hotels utilize credit card holds:
- Securing Payment for the Room: The primary reason is to guarantee payment for your accommodation. By placing a hold, the hotel ensures that you have sufficient credit available to cover the room charges.
- Covering Incidentals: Hotels also use holds to cover potential extra charges you might incur during your stay. This can include things like room service, mini-bar purchases, pay-per-view movies, damage to the room, or late checkout fees. Some guests might conveniently bring things home too.
- Verification of Funds: The hold allows the hotel to verify that your credit card is valid and has sufficient funds available. This helps prevent issues at checkout if your card were to be declined.
How Much is the Hold Typically For?
The amount of the credit card hold can vary depending on several factors, including:
- The cost of your room: Generally, the hold will at least cover the total cost of your room and applicable taxes.
- The hotel’s policy on incidentals: Some hotels have a standard daily or per-stay amount they add to the hold to cover potential extras. This amount can range from a nominal fee to a more substantial sum.
- The length of your stay: Longer stays may result in larger holds.
- The type of hotel: Higher-end hotels with more amenities might have larger hold amounts.
It’s always a good idea to ask the front desk at check-in about the hotel’s policy on credit card holds and the estimated amount. This can help avoid any surprises when you check your online banking or credit card statement.
What Happens to the Hold?
The crucial thing to remember is that a credit card hold is not a final charge. Once you check out and settle your bill, the hotel will release the hold. The time it takes for the hold to disappear from your credit card statement can vary depending on your bank or credit card issuer. It can typically take anywhere from 3 to 10 business days, but in some cases, it might take a little longer.
Potential Issues and Tips:
While credit card holds are a standard practice, they can sometimes lead to issues:
- Reduced Available Credit: The hold temporarily reduces your available credit limit, which could be a concern if you have a low credit limit or plan to make significant purchases during your trip.
- Multiple Holds: If you’re staying at multiple hotels during a trip, you might encounter several holds, further impacting your available credit.
- Delayed Release: Occasionally, the hold might take longer than expected to be released, which can temporarily tie up your funds.
Here are a few tips to navigate credit card holds smoothly:
- Inquire at Check-in: Always ask the front desk about their hold policy and the estimated amount.
- Consider Using a Credit Card with a Higher Limit: If you anticipate needing your full credit limit during your trip, using a card with a higher limit can help mitigate the impact of holds.
- Monitor Your Credit Card Statement: Keep an eye on your online banking or credit card statement to ensure the hold is released within a reasonable timeframe after checkout. If it’s taking longer than expected, contact the hotel or your bank.
- Consider Using a Debit Card (with Caution): While some hotels accept debit cards for holds, be aware that the held amount will be directly deducted from your bank balance and might take longer to be returned compared to a credit card hold. This could potentially lead to temporary cash flow issues.
Understanding credit card holds at hotels can alleviate any confusion or concern during your travels. It’s a standard security measure that ensures a smooth transaction for both you and the hotel. By being aware of the process and asking the right questions, you can focus on enjoying your stay without any unexpected financial surprises.
For budget or boutique hotels in Malaysia, they usually collect cash deposit instead of credit card holds. The main reasons for this is there are no significant expensive items in the room and there is no mini bar. They usually refunds the deposit to you in cash once they checked the room after you check out.
For credit card holds, it is quite common for luxury hotels or hotels in abroad. For example, I went to Pattaya earlier this year and the hotel requested a substantial credit card hold due to our multiple room bookings. They will usually release the credit card hold on the same day or within a few days depending on their hotel policy.
That is why it is important to carry multiple credit cards and some cash when you are traveling. Don’t depend on one credit card only.
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