Understanding Credit Card Blocking
Credit Card Blocking Basics
Credit card blocking isn’t as bad as it sounds. Credit card blocking, also known as credit card preauthorization, happens when a merchant blocks a certain amount of your available credit without actually charging your credit card. Still confused as to what credit card blocking is? Let me explain…
An Example
One example of credit card blocking is when you call to reserve a hotel room. The hotel takes your credit card number and while they do not actually charge your credit card number for the hotel room right then and there, they do block the amount of credit that you need in order to pay for the hotel room from your line of available credit. While you haven’t really been charged for the credit card transaction, you don’t have that credit available since it’s been blocked by the merchant.
The Risk
If you make a lot of credit card transactions that involve credit card blocking, you could be putting yourself at risk of going over and above your credit limit. This will cause you to incur over-the-limit fees, which could be quite substantial. Because of this, you want to limit the number of transactions you make that involve credit card blocking.