When you book a stay at a hotel, you may notice a large hold on your credit card account as a pending charge. While the charge is only temporary, it can lower your purchasing power for the duration of your trip.
Hotels aren’t the only kind of merchant to use pre-authorization holds to ensure funds for a potential charge, but they typically hang around for the longest time. Today, I’ll walk through what these holds are used for and why they can take so long to clear from your account.
What is a credit card hold?
A credit card hold is request from the merchant that funds be pre-authorized on your credit or debit card pending a final transaction. Car rental companies, gas stations and hotels are three of the more common merchant types that will put a hold on your account.
The precise process for hotel credit card holds can be confusing to understand since multiple parties are involved with their own role and rules in the transaction. When you check in to a hotel, you’ve probably noticed that you are asked to provide a credit card for incidentals and any room service and/or minibar charges. This credit card is what the hotel will charge in the case of any damage to your hotel room.
Each hotel will have its own specific hold amount, generally $50-$200, on top of your room rate (including taxes and fees). While the hotel won’t officially charge you until after you check out, the issuer will put aside the hold amount in the interim to ensure you are able to cover a potential charge.
That pending charge takes up part of your spending power on your credit card, which can be limiting when you are on a trip and need that additional spending power on your card to pay for dining and other activities.
Related reading: 5 things you need to know about debit and credit card holds
Why do hotels use holds?
Payment networks such as Visa or Mastercard are actually the ones that require a hold because of how hotel payment processes work. Any time a merchant processes a card before the final charge amount is known, your card network will likely require a hold to ensure that you have enough buying power in your account to pay off a reasonable charge.
This limits the risk taken on by the payment network that a charge will be made that you do not have the available funds for and for later chargebacks.
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Why can hotel holds take so long to resolve?
The amount of time a hotel hold may stay on your account varies from hotel to hotel. Generally speaking, a hold will be released within 24 hours of checking out. But sometimes, it can take up to a week to see the charge disappear.
Why does this happen? You might be tempted to blame the hotel, but it actually comes down to the card issuer.
Payment networks set rules for how long an issuer can set aside a hold. For example, Visa cards can only have a hold last for up to 30 days, while Amex cards only allow holds for up to seven days. But while payment networks set limits, the issuers each have their own standards in place for how long a pre-authorized charge may stay pending on your account.
So even after a hotel notifies a card issuer that a hold is no longer required pending an official charge, an issuer may still take a few days to remove the original pending charge.
Credit card holds are, unfortunately, just a fact of using a debit or credit card with certain merchants like hotels. The only way to avoid a hold altogether is to use cash, but then you lose out on credit card points and other potential benefits that come with swiping your card.
However, one way to help ensure your hold is released as soon as possible is to use the same credit card for the hold as you do for the room charge. Conversely, when you use two separate payment methods, it can take longer for the pending hold charge to be removed.
Related reading: The best hotel credit cards