Why To Have A Spare Credit Card
Many people have experienced this credit block, specially the frequent travelers. Hotels post notices of their policy regarding blocking, usually in the form of an obscure plaque some clerks will point to when an inquisitive visitor checks in. Car rental companies rapidly recite their policy to callers wanting to reserve an SUV for the family vacation. Still hundreds of unsuspecting customers will feel the pain of credit card blocks every day. What is credit blocking?
Due to the risk involved, credit card issuers block your credit. The amount of credit reduces when a block is applied to your account. Plus the amount of the block may be more than expected as the bank may add in additional estimated charges such as gasoline for a car rental or food for a hotel stay. Even a pay-at-the-pump transaction can cause a $100 block to be placed on a card. These blocks or "holds" can cause for some rather difficult times if you unknowingly end up in the bad situation.
Suppose you are flying to Las Vegas for the weekend. Assuming you have not yet acquired high-roller status, you will need to reserve a flight, car rental and hotel room.
Each of these reservations will cause a block to be placed on your ever-faithful rewards credit card. Then in an effort to smooth-over the news of your impending excursion, you take your significant other to the finest restaurant in town. Just think of that situation when waiter lets you know that your credit card is blocked.
Another, and even more heinous scenario, would have the person securing these future charges with a debit card. With every reservation a block is placed on the checking account underlying the credit card. Then the flowers, dinner, cab fare and concert tickets would have all generate separate overdraft charges. No need to tell you any checks clearing during the time the blocks are in effect. Ouch.
Always maintain a balance well below the usable limit of your credit card to avoid any blocking problems. Although this is wise advice it may not always be practical considering the somewhat varying amounts and timing of the blocks. Do not make your reservations from debit card. Ever.
A better way to avoid this trap is to keep an extra another credit card with you. A method employed by many, a spare credit card can be used to place all the reservations thereby protecting the available credit of your preferred card. Then when the actual charges are made the favorite card can be used and any rewards can be accumulated. An additional benefit is the block transactions provide activity on the spare card furthering its value as a tool to enhance your credit score.
Like many credit related issues, knowledge and a little foresight can go a long way in preventing unexpected problems and expenses. Now since you know about credit block, it is the time for a action to make sure you do not fall into the trap of credit block.
Due to the risk involved, credit card issuers block your credit. The amount of credit reduces when a block is applied to your account. Plus the amount of the block may be more than expected as the bank may add in additional estimated charges such as gasoline for a car rental or food for a hotel stay. Even a pay-at-the-pump transaction can cause a $100 block to be placed on a card. These blocks or "holds" can cause for some rather difficult times if you unknowingly end up in the bad situation.
Suppose you are flying to Las Vegas for the weekend. Assuming you have not yet acquired high-roller status, you will need to reserve a flight, car rental and hotel room.
Each of these reservations will cause a block to be placed on your ever-faithful rewards credit card. Then in an effort to smooth-over the news of your impending excursion, you take your significant other to the finest restaurant in town. Just think of that situation when waiter lets you know that your credit card is blocked.
Another, and even more heinous scenario, would have the person securing these future charges with a debit card. With every reservation a block is placed on the checking account underlying the credit card. Then the flowers, dinner, cab fare and concert tickets would have all generate separate overdraft charges. No need to tell you any checks clearing during the time the blocks are in effect. Ouch.
Always maintain a balance well below the usable limit of your credit card to avoid any blocking problems. Although this is wise advice it may not always be practical considering the somewhat varying amounts and timing of the blocks. Do not make your reservations from debit card. Ever.
A better way to avoid this trap is to keep an extra another credit card with you. A method employed by many, a spare credit card can be used to place all the reservations thereby protecting the available credit of your preferred card. Then when the actual charges are made the favorite card can be used and any rewards can be accumulated. An additional benefit is the block transactions provide activity on the spare card furthering its value as a tool to enhance your credit score.
Like many credit related issues, knowledge and a little foresight can go a long way in preventing unexpected problems and expenses. Now since you know about credit block, it is the time for a action to make sure you do not fall into the trap of credit block.
posted by ravi at
4:41 AM
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home