Credit card Guide
What is a Credit Card Blocking?
Credit card blocking is relatively a new term that has come into the market. With credit debt being one of the largest contributors to people finding themselves in quite a lot of debt, there is no real surprise that a number of precautionary measures have been put in to place to reduce the chances of unpaid debt. When ever one applies for a credit card, regardless of which merchant they decide to go ahead with, most of the time we tend to over look the terms and conditions of our contract. Our general approach is to take a quick glance over the important facts that we need to be aware off and end up committing ourselves to a particular merchant.
Regardless of which credit card you decide to opt for, one thing that you can expect to find in all credit card companies is a credit limit that you are allowed to spend? The amount of this limit is known to vary depending on which merchant you decide to go ahead with. Credit card blocking is solely based around the credit limit that is granted with your account.
Say for example your credit card limit is $30,000 per month and you checked into a hotel on the basis of a five day reservation. Even though the payment of the reservation will not go through until the five days are over, the credit card company will block the amount that will be needed to pay the expenses in advance. Say the hotel reservation for five days will cost you $25,000. What this basically means is that your credit card company makes a provision that this amount will be charged to your card in the next five days. For this reason, they end up reducing your limit to $5000. In some cases, where the entire limit is exceeded, the credit card is put on block.
What that would mean is that even though the payment of your hotel reservation would still go through, but if you tried using your credit card somewhere else for other purchases, the card may be declined. This is to ensure that you not exceed your credit card limit in any circumstance what so ever. Many people try getting an extra credit period from their merchants; however this is not recommended as the costs charged for such transactions would prove to be quite costly.
There are a number of ways that you can avoid credit card blocking. For starters, try making sure that you don not fully use your credit card limit on one account alone. If you are going on holiday, especially with a family, it would be a good idea to take more than one credit card. Ideally, the best option would be is to take a debit card or cash instead ensuring that you do not have to worry about paying debt at the end of the month.
If you still insist to go ahead with using a credit card, it is advised that you look around the market to ensure you find a good deal.
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Credit Card FAQ
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- More at: Credit Card FAQ