Posted by Mike Smith :: August 21, 2007 @ 7:01 am

If your credit or debit card is ever declined, despite your belief that you have sufficient funds or credit, then card blocking may be the reason.

Card blocking is a routine practice used by many hotels, car rental agencies, restaurants, and even gas stations. When you use your card at these establishments, they may preauthorize your account for the amount that they expect you to spend. You can imagine a hotel preauthorizing your entire stay when you check in.

Blocking is used to protect those providing goods and services from loss. It makes sense that they would want to ensure that you would be able to pay them when payment is due. For some items, like a hotel stay, the base amount may be easy to determine. Other transactions, like a trip to the gas station, may be more difficult. I’ve heard of some gas stations blocking $50 for all pump-based transactions. If you are only buying a gallon or two, for your lawnmower, for instance, you would still have the full amount blocked.

When you have blocks on your account, it will reduce your credit available (for credit cards) or you balance available (for debit cards). A problem arises when you are near your credit limit, or your debit balance approaches zero. Blocks tend to be removed within a day or two of purchases, but that’s only the case if you pay with the same card that was preauthorized. The block will be in place longer if you check into a hotel with one card and then decide to pay with a different one. In such cases, it can take two weeks or more for your block to be removed. Having blocks on your account for so long can be a problem, as they tie up your funds while they are in place.

As you’ll often hear me say on the Lending Club blog, becoming aware of pitfalls such as card blocking is the first step in ensuring you can avoid them. Review your bank or credit card issuer’s policy on blocking. Whenever your card is requested, don’t be afraid to ask if it is for blocking purposes, the amount that will be blocked, and the how long the block will remain. Try to pay bills with the same card that was blocked. If that’s not possible, ask to have the prior block removed.

For more information about blocking, and for some additional tips to avoid any issues that it may cause, see this article from the FTC.