Solving the credit card “hold” mystery


It’s like an episode of “Unsolved Mysteries” that plays itself endlessly for travelers.

It happened to Judith Searcy when she stayed at the Portland Marriott Downtown Waterfront in Oregon this summer. If you check your credit card statement, you may find that it has happened to you, too.

For Searcy, the mystery was a $518 pending charge to her card after she checked out of the Marriott. “I had not been told of this charge, nor did I have any documentation for it,” says Searcy, who is retired and lives in Austin. She phoned Marriott, which asked her to leave a voice mail for a manager.

Days later, the $518 charge disappeared.

Identifying this mystery is easy, but solving it isn’t. There’s an explanation for these charges and a valid reason for having them. But they can also be frustrating to hotel guests, especially those who receive unexpected alerts from their credit card companies. And they raise the question: Is there a better way?

Unlike most other travelers, who might have been content with the reversal, Searcy asked for an explanation. She finally received one after reaching Tiffany Bush, the hotel’s general accountant. Turns out the charge was a routine credit card “hold.”

“This charge happened at check-in when your card was first swiped and our system automatically authorizes for possible incidental charges,” Bush wrote in an e-mail. “Our system will continue to check that the card has enough funds as you add charges to your room.”

Marriott, like other hotels, discloses the hold at check-in. “Credit card holds are typically released within 24 hours of checking out,” says Marriott spokesman John Wolf, who notes that holds are an industry-wide practice, common among hotels and car rental companies.

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Most hotels place a hold on your credit card, according to Dale Blosser, a lodging consultant. The amount varies, but as a rule, it’s the cost of the room, including tax, plus a set charge of between $50 and $200 per day. “That basically establishes a line of credit for typical items that the guest might charge to the room, such as room service, restaurant or bar charges, gift shop merchandise or valet parking fees,” Blosser says.

There’s another reason for a hold: It’s a security deposit of sorts, in case you trash the room. “It’s a way to insure against damage or loss,” says Kari Luckett, a financial expert who edits the credit card Web site CompareCards.com. The more expensive the room, the greater chance you’ll experience a generous hold, she adds. “It’s usually from five-star hotels and hotels that pack the room with food and drinks or offer room service or concierge.”


But that’s just one part of the mystery. The other is what happens behind the scenes with your credit or debit card. The hotel is asking your bank to post a charge against your account — in banking terms, it’s called an “authorization request.” The hotel then has about a week to make a deposit request, which is the actual transfer of money from your account. On some cards, notably debit cards, that initial authorization request looks like a charge, which is what Searcy saw.

Some hotels just pre-authorize one dollar, says Scott Tivey, a credit card payment expert with CNP Solutions. “They expect at some point in the near future that the same merchant will send in the deposit transaction to actually capture the funds,” he says.

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And that’s how it happens — the hotel withdraws the charge after you check out. Except when it doesn’t.

Kelly Merritt’s experiences with credit card holds serve as a cautionary tale. Merritt, a frequent hotel guest and travel guidebook author, says these routine authorizations represent her “biggest pet peeve” about the lodging industry.

“What infuriates me most about this is the song and dance,” she says. “When I’ve protested exorbitant authorizations, some front desk staffers have responded with, ‘Oh, your card isn’t being charged, we’re only authorizing it.’ That still means those funds will be unavailable to card holders, and for traveling families on a tight budget, or people like me who often have to stay in a different hotel every night, it can be a problem.”

You can take steps to avoid the hold. Merritt always asks about the per-night authorization amount when she checks in. And in the case of excessive holds, she has requested the hotel not to authorize her card for more than the room and tax. If it insists, she tries to negotiate a smaller amount.

One of the easiest ways of preventing a hold is to avoid using the card, says Harrine Freeman, a credit card expert and financial adviser. “Use an alternative payment method,” she says. “Carry travelers’ checks or pay with cash.” However, some hotels accept only credit cards, so ask before you try this.

If you use a credit or debit card, make sure you keep close tabs on the authorizations. Freeman and other experts strongly recommend that you sign up for automatic notifications from your bank. That way, you know exactly when a hotel authorizes your card and when the money is no longer on hold.

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“Completing the transaction is the best way to remove the hold,” says credit card expert Kevin Haney of A.S.K. Benefit Solutions. “The merchant charges the account for the final amount. The bank then releases the hold.”

Perhaps the biggest mystery of all is why this needs to be explained to travelers in the first place. Hotels should disclose the amount, reasons and estimated duration of a credit card hold long before you check in, upfront and in plain English. Too often, hotels reveal these holds at the check-in desk, on signage that guests rarely bother to read.

Should companies be required to disclose their "hold" amounts?

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Christopher Elliott

Christopher Elliott is an author, journalist and consumer advocate. You can read more about him on his personal website or check out his adventures on his family adventure travel site. Contact him at chris@elliott.org.

  • Carver Clark Farrow

    I was with the article until the end where it asked, Are credit card companies too permissive with their credit card “holds”. The credit card company has nothing to do with the hold. It’s purely the merchant. Of course, the poll question and article don’t need to match.

    Here is a point where Chris’ populist leaning could be useful. Why don’t hotels disclose the hold amounts. Well, the most profitable guests tend not to be concerned about the hold amounts. So why rock the boat. I think the hotels should be more proactive in informing guests the amount of the hold.

    I stayed at the W Hollywood a few weeks ago. They put a $300+ hold on my credit card, just for one night. That was the biggest hold I can remember.

  • polexia_rogue

    here is my issue with

    “your card isn’t being charged, we’re only authorizing it”

    if you have a credit card then ok. you will see the charge as “pending.” feel free to get pissed, but there is no need to freak out.

    BUT if you have a debit card the money is GONE. you may get it back later, but it is a much worse feeling.

  • Carver Clark Farrow

    The money is not gone, it’s on hold. It’s still there.

  • The Original Joe S

    I stopped using the debit card. For reasons such as this.

  • Cybrsk8r

    With all the data breaches, in almost every type of business, from gas stations, to big box retailers, to hotels, it’s a pretty risky proposition to use a debit card at all. My debit card gets used at my bank’s ATM and that’s it. I haven’t used it for anything else in almost 10 years.

  • TonyA_says

    Well that is the difference of a DEBIT card. Since you do not have a line of credit, your bank account BALANCE itself is immediately debited or reduced when a HOLD is done. So your own money is taken away from you until the final bill is settled. There is no bank money to play around with.

  • You’re right. Poll question changed. That’s what you get for writing a poll without the benefit of caffeine.

  • Jim

    Or without asking Carver first!

    I wonder how they do this in Japan…

  • Jim

    It is strange that they do not disclose this amount as the norm, but I have noticed more and more hotels actually being up front about it at check in. Meaning they tell you that they are charging for the room and the hold amount.

  • I’m not shy about asking for help. If Carver or Arizona want to help edit these stories, I would love to include them in my editing group.

  • TonyA_says

    Some of the questions here can be better answered by tha Visa Acceptance Guide for the lodging industry.

    usa.visa. com/download/merchants/visa-acceptance-guide-lodging-industry.pdf

  • TonyA_says

    The cheapest room next weekend is about $350 with tax. Ah, what did you expect the authorization amount to be?

  • sirwired

    If I can’t spend the money on something else, the idea that it’s not “gone” (over to the merchant’s account) is a distinction without a difference.

  • taxed2themax

    I don’t have an issue with the concept of a hold as I agree there’s a legitimate need for the business to do so.. That said, I do also think that the merchant should be disclose the amount of the hold that will be placed at some point – and do so before such hold is applied.

    I know some hotels I’ve used have allowed alternative forms of “holds” like a cash hold or even a hold placed using a different credit/debit card. Sometimes I’ve negotiated a hold amount and once had a hotel offer to waive a hold in exchange for disabling things like the ability to “sign” things to my room or such.

  • skiplockweird

    This is nothing new, and not worthy of the time it took to write.

  • Grant Ritchie

    Not new to you, maybe, but new to somebody. Thus… worth writing about.

  • TonyA_says

    Re: Judith Searcy when she stayed at the Portland Marriott Downtown
    Waterfront in Oregon this summer. She saw $518 pending charge to her card after
    she checked out of the Marriott. Days later, the $518 charge disappeared.

    I am not quite sure why people are shocked about something like this happening.
    Usually if the guest (Ms. Searcy) checked out with the same credit card that was pre-authorized at check-in, then all the hotel had to do is finalize (settle) it (the same credit card authorization). The final amount will show as charged. Hence most hotels simply ask if you want to keep the charges on the SAME credit card.

    But if the guest uses a different card at checkout they will charge the full (final) amount to the new card but may forget to cancel the pre-auth on the old card. That will keep the hold amount on the old card until it drops after the hold expiry date or is cancelled later when found out (whichever comes first).

    There are some occasions when you check out too early and the person in the desk cannot find your pre-auth and decides to make a new charge on your credit card (whatever you present at check out). Since this could be the same card you used at check in, then there you will see 2 charges. One final and one pending (the hold for the pre-auth) until is expires or is cancelled. The difference in the latter is that the pre-auth was never finalized.

  • This is one of my most commonly-asked questions from readers. Definitely worth answering.

  • TonyA_says

    Let the writer decide that :-)

  • Grant Ritchie

    Nah… never happen. They enjoy your stories the way Frasier and Niles Crane enjoy an “exquisite meal with one tiny flaw (they) can pick at all night.” :-)

  • TonyA_says

    Honestly, it is more fun making comments here rather than editing Chris’ work :-)

  • TonyA_says

    It could be worse than gone. It can be very embarrassing at a check out counter :(

  • NakinaAce

    In the operation of our luxury short term apartments in Prague (Czech Republic) we offer to either hold an amount in cash for the security deposit or place a hold on the credit card. In both cases we make the amount known in advance to the guest. These are not used to cover additional charges because there aren’t any but to cover damages that may caused by the guest. We inspect each apartment when the guest checks out and then either return the cash or release the hold on the credit card. The hold on the credit card is really offered as a benefit to the guest of not having to come up with that amount of cash at the beginning of their stay. It has worked well for us over the last few years without a single complaint.

  • Blackadar

    “Marriott, like other hotels, discloses the hold at check-in.”

    140+ nights in Marriott hotels just this year and not once was this disclosed.

  • This is actually a serious issue I believe many of you have dismissed. There is a larger issue: What is the right for holding funds that are unlikely to occur?

    I have actually written to the CSPB about this – and I am a small government type of guy – because I think this is essentially doing one of two things: 1) charging for things unlikely to occur and tying up someone’s finances and 2) ties up float in the financial system.

    Let me speak to the first issue first: I think all agree that a hotel would be within its rights to charge for the period of the reservation stay up front at check in. If you couldn’t stay for your term of reservation, that is your issue, not the hotel’s. HOWEVER, putting $50-$200 a day for what? Long distance calls that are now done on cell phones? High speed internet that is often included in the price? The restaurant that you likely put on your c/c anyhow?

    Seriously, unless you are in a resort location with spas and high end mini-bars (not the $5 package of peanuts type), what incidental expenses are you being pre-charged for? And if you’re name isn’t Jim Morrison, or you are not a 70’s rock band or named Flava Flav (by the way, very noticeable by the large clock hanging on a chain around your neck) – to make it more current than my references – what vandalism are you being pre-charged for? After all, isn’t the hotel likely going to file an insurance claim and subrogate the claim anyhow? So, again, what vandalism is being pre-charged?

    I can see a $1 verification charge, but not $500. That is ridiculous. (Here’s an issue, if you’re going to do anything, why not $50, then recharge that when the balance drops like a toll-tag? But $200 per DAY?)

    In today’s world, you can capture cash in a millisecond. I can go anywhere in the world, get money from an ATM and my balance in Denver is changed within 1 second. Are hotels some sort of Twilight Zone where it takes weeks for charges to appear on your bill between the restaurant and the accountant? So, why the need? Charge the card when things are billed to the room…seems pretty simple to me.

    Now, let me address the second: If using a debit card, which many people with bad credit are relegated to, what happens to the (albeit paltry) interest on those funds if on an interest bearing account? What happens if someone has an ACTUAL expense that is occuring and it bounces and “fees-up” as a result of the holding charge? Who pays that? The hotel? No. The bank account holder.

    There was a recent article I thought that Elliott did that where a family had a holding charge at a resort location and it literally turned them into the traveling poor. This family of meager means budgeted literally to the penny – which even a majority of us on this thread likely are not responsible enough to do – then get wiped out by holding charges.

    Now, I have been fortunate enough to not have had this problem, but I am angered by it. I have nearly $750 in charges held on my credit line. I no longer use that chain.

    It bothers me that so many of you excuse this behavior. Think about it: Aside from the charge for the stay – which is common ground we share – who burrows into their holding charge on their account? I am going to state that maybe 10% do, and I will bet that of that 10% about 1/2% meet or exceed that pre-charge. So, how would making that amount a cursory amount $1-$50 (TOTAL), create a negative impact on hotels? How would charging as incurred make a difference?

    However, due to the fact that the majority of transactions are now on debit cards (about 60% is the last number I saw, with about 10% CAGR vs -4% CAGR for credit cards), this practice is financially impairing families’ transaction capability until those charges are removed from a debit card.

    So, while I am literally the biggest raving Libertarian, this is a practice that should be drastically curtailed.

    I have been blessed not to worry about it. But this is something that potentially hurts consumers (especially those using debit cards) — holding funds that will likely never get used then refunding them on a chain-by-chain, processor-by-processor, bank-by-bank basis.

    This should be a CSPB issue.

    PS Sorry for the edits. This practice does make my blood boil. In fact, one could make a case that this coincidentally – though maybe not deliberately – hurts a disproportionate amount of minorities. Thus, MAY be discriminatory in terms of impact. However, an attorney’s opinion would be greatly appreciated.

  • Extramail

    And, more fun to read. In a perfect world . . .

  • Marriott is the chain to which I refer in my post. They pulled that on me.

  • TonyA_says

    Why not just get a couple of credit cards?
    There might be a few links here in Elliott because he is part of BoardingArea.
    You can help yourself and Elliott at the same time.
    Even my young kids get 70k mile credit card offers, so who does not?
    A deadbeat is a deadbeat for a reason. Why should hotels take on more risks with deadbeats?

    I cannot see we have to socialize this imagined problem when it so easy to get a credit card in this country. Just find the links here and click away. Better still do an app-o-rama :) /sarcasm

  • TonyA_says,

    That is a large leap regarding deadbeats. While a percentage of people abuse the system, you have not addressed my alternatives: such as “pay as you go”. That would stop and/or mitigate losses — significantly earlier, in fact.

    While I am a free-marketer, think about this: 1) I fill up my tank, I get a $75 holding fee. By the way, in LA, I was topping up a car near LAX…$75 holding charge for $7 in petrol that took nearly 10 days to come off. I couldn’t use $68 of my credit line. But what IF that were the difference between paying for a new engine, a transmission, other car repair. Then what? I am not a deadbeat, but I am turned into one…through no fault of my own.

    2) Not everyone wants – or can get – credit. Getting a credit card offer is different than getting the card. Everyone – literally – gets offers, but not all result in an actual card.

    3) The most important point: Why should you be charged for something that MIGHT occur? I have no problem in being billed for things that DO occur. Why can’t when I sign room 206 on a hotel bill, couldn’t it be charged right then? After all, I could go into a hotel tomorrow and sign YOUR room number and you don’t know about the fraudulent charge until check out. So, isn’t this practice ENCOURAGING the opportunity for fraud?

    Nah, in today’s world you can lock up a charge within about 50 milliseconds. This isn’t 1977 where paper advices go through 30 sets of hands over 4-6 weeks to get processed.

    4) I suspect this practice will stop when several someones get slammed for $300 in fees for bounced items that were actual charges (checks if on a debit account) get punted in favor of the holding charge and they sue.

    5) THINK ABOUT THIS: if getting the cash quickly is the issue, they prove they can get it by the holding charge. So, their arguments about mitigating risk falls apart on the face of it. They can get their restaurant bill, spa bill, etc paid on the spot if they process at the point of sale. So…why not?

    Again, I am suggesting that the mega resorts might be different, but let’s face it, we’re talking about normal travelers’ hotels here.

  • PS I often use debit cards (though not anymore at hotels due to data breaches). I move only the amount of money I know is to be charged in the next 48 hours so that the account cannot be raided down the last dime. Does that make ME a deadbeat?

  • TonyA_says

    I did not call you a deadbeat :)
    But if you insist on using a debit card for hotel bookings then you chose to have a problem.
    Sorry but for travel, debit card is a defective product.

  • Jeanne_in_NE

    What ads? You taught me about AdBlock, for which I thank you profusely!

    The deadbeat thing came out of nowhere. It’s possible to travel on a budget and pay bills according to that budget. When holds larger than the budget occur, that does mess up the next segment of travel or other purchases during travel, if the traveler has a low credit limit on their card.

  • No. I chose to pay as I go in my business. I have no debt. Why should I be forced to use credit just to accommodate a charge I MAY – but, in actuality, will not – encounter.

    I pre-pay my trips when I can and use cash to mitigate data breach risk. Are these practices defective too?

    Again, the point: WHY CAN’T CHARGES BE SETTLED AT THE POINT OF SALE AND NOT VIA A HOLDING CHARGE?

  • TonyA_says

    Because a hotel cannot completely be sure what you might have damaged in their property or may have billed you for all expenses at check out.
    I have had several (last breakfasts) not charged to my bill when I check out. So I get an amended statement later.

  • TonyA_says

    That’s the risk a person with low credit limit has to live with.

  • Again, they have insurance against vandalism. They are also maintaining the room daily. So that claim fails on the face of it. Those damages will be subrogated to the insurance carrier to pursue.

    And your second point fails: why not charge at the point of sale? If they did, that would not be an issue either.

    Next?

  • TonyA_says

    I think you fail to understand the a credit card is a FORM OF PAYMENT and a method of GUARANTEE.
    I, too, have ZERO debt (very lucky person). But I have credit cards (which I pay in full all the time) because I have to operate in a system that favors payment by credit cards.
    Unlike you, I don’t bother to complain about it because I know it works and I can easily adapt to it.

  • You are indeed blessed, but you miss the big picture. How much money is tied up like this? Millions? Billions?

    How many fees are lower income people pounded with because of this practice? Millions? Billions?

    How much risk is avoided? Likely a VERY significantly lower amount.

    Quite the contrary, you are complaining that it should be an acceptable practice. And you are WRONG, you are operating in a system that favors electronic payments (not credit cards) — 60% of which are by debit cards.

    Let me ask you this: If you have $600 in hotel stays coming up, with $400 in holding charges, try to offer the front desk $1000 and no credit card. You will be laughed out the door.

    So, again, the reasons you offer fail on the face of them.

    Again, the vandalism angle is covered by insurance…and a low risk (oh, and it’s a crime, too…so why not have the police stationed in your room if it is such a risk?).

    And using my proposal also negates your assertion of risk mitigation.

  • TonyA_says

    Insurance? Man, you are really living in a different world.
    Try to charge something to your business insurance and see how your insurance costs get adjusted the next day.

  • Vec14

    Most of the hotels I’ve stayed at are pretty good at disclosing the hold charge – I think the highest one I’ve seen was $125, but most have been in the $25-$50 range which I think is pretty reasonable. Last one I had was $15 for a hotel in Canada, which they forgot to mention and I had to ask about because I thought I might have been charged the wrong rate or there was an exchange rate issue.

    I’m not sure what a US hotel would think if you wanted to pay in cash, but it wasn’t an issue when I visited Switzerland.

  • TonyA_says

    Since when did we have a problem with liquidity in the system?
    18 Trillion in gov’t debt not good enough to add more QE for you?
    If you have a problem buying gas with a debit card, try CASH and walk inside.
    That works.

  • SnowWheet

    To plenty of casual travelers I’m sure this IS new. It’s not something everyone considers when they budget for their trip using a debit card…

  • How do you know they are not both CLAIMING and CHARGING for the damage? I bet they do. Wanna take the short end of that bet?

    And who’s to say the damage was caused by you? If you do check out on the TV and something happens afterwards, where is your due process (even civilly) to disclaim responsibility?

    Hell, I have been given a key to a room that someone was sleeping in. Thankfully, they were soundly asleep and I quietly closed the door and went to the front desk. Lucky for them, I was not a ne’er-do-well.

    I am saying vandalism whether you’re a landlord (which I am) or hotel operator is a fact of life and a part of doing business. And let’s face facts, if it’s such a problem, then have security right in the room with ya’.

    On a more serious note, those who are going to do the most damage can work the system anyhow (e.g., stolen credit card), which would be disputed/rejected charges anyhow. So, you have still failed to offer substantial support for your complaint.

    Do you think someone who is going to do a rolling meth lab in a room (which is done) is going to use their own card? Of the MILLIONS and BILLIONS of hotel nights in the USA, how many have significant vandalism (to the point it gets reported in the media)? I can’t remember ONE in the past year in the Denver market.

    What level of vandalism are you going to charge for? Stolen towels that may have been misplaced by the maid? Broken glassware?

    If you wind up klepto-ing a coffee pot, you get theft charges filed and will likely be required to do restitution as a condition of plea. So, the cost is covered there.

    If the vandalism is in the $10,000+ range, who on this board has that just “sitting” in a checking account to be raided…particularly when the charge limit per day is $2,500 on a debit card? SO, AGAIN, your theory fails on the face of it.

    Hell, 76% of Americans live paycheck to paycheck according to CNN. Do you think they will have $1000 extra to be “held”?
    http://money.cnn.com/2013/06/24/pf/emergency-savings/index.html

    Think about that. Let’s assume the traveling public is a largely representative sample of Americans. 76% of Americans are imperiled by this activity.

    Let’s assume the lower two quintiles of Americans are less likely to travel anyhow due to economic circumstances, and let’s assume that 76% is increasingly represented in the lower 4 quintiles. For argument’s sake, let’s say that means that 1/2 of that 76% is affected (2 of the 4 quintiles remaining) by this policy. That means 38% of Americans are financially imperiled by this practice of tying up money for charges that have not happened.

    That is what bothers me.

  • Tonya, you keep arguing small ball, while I am arguing policy. Had I known $75 of my credit card was going to be held, I would have paid cash. It didn’t impact me, but it likely does others less fortunate.

  • Why should they? Maybe they don’t want a high limit? Maybe they’re rebuilding their life after a bankruptcy or divorce? Maybe their income is very modest and they choose a low credit limit to pay for incidentals and are concerned that if they use a debit card, a data breach can wipe them out. However, $500 is just about right to transact with less risk.

    What if they just don’t want credit? What if they just want to pay cash?

  • Tonya, you are confusing government obligations with the private sector. By the way, the $18T is debt (money we don’t have) thus it – by definition – creates illiquidity, which creates “crowding out” in the financial system and actually retards growth.

  • Blamona

    I’m in the travel world, 1 thing Christopher, that you should restate is avoid Debit cards for holds when traveling, especially in foreign countries. Credit fine, but hotels, rental cars, restaurants, can all place holds. With debit, if there’s a mistake foreign banks can make a mess of “un” holding! Actually avoid debit cards for payments when traveling anyway. The problem with Debit is it comes out, and sometimes gets complicated getting back. Credit is just a “true” hold. Foreign banks, clerks you don’t understand, not able to go back to fix from home, I’m just saying!

  • Actually, upon reflection, it’s a very nice comparison of what happens in the process you so freely support: The policy creates illiquidity on the cardholder.

  • Bill___A

    Marriott generally tells me…not every time but usually. Normally it is the room charge including any taxes plus $50 per night.
    In the US, I see at nearly every hotel, a “debit card notice” about the funds hold policy.

    This is something that’s been done for years, it is the way they handle this issue of payment.

    Also, I believe on longer stays, Residence Inn by Marriott clears the charges through every Wednesday. I’m not sure what other chains do.

    The article is useful because it helps people know what they should be aware of during travel (like the car rental article earlier).

    Although most people don’t care to know every little thing, there are indeed a lot of things that go on in the background with travelling

  • LFH0

    While I generally believe that two people can negotiate an agreement between themselves without government interference, here the issue (again) is a matter of disclosure, an issue I think the government has a compelling reason to regulate (so that the parties to the contract know what it is that they are agreeing).

    Now consider a person, having made a “non-refundable” hotel purchase in advance, arriving at check-in, and being told for the first time that a large credit card hold is “required” (Chris Elliott: “Too often, hotels reveal these holds at the check-in desk . . . .”). Guest refuses to allow a hold on a credit card (or, perhaps, does not possess a credit card or “sufficient” cash). Is the “non-refundable” hotel room purchase contract enforceable?

  • Bill___A

    I don’t “excuse it”. I understand it and I deal with it.
    When a hotel lets you into their facility, they are trusting you with thousands of dollars worth of their investment.

    Should they pre-authorize an extra $1000 for smokers in case the person smoked in the room? Should people who eat too much be charged a higher deposit because they might have an increasing risk of staining something with food? What about families with children? I’d say pets but they are already charged a fee or damage deposit…or both.

    One could go on and on with all of the combinations and permutations regarding the guests’ issues and the hotels’ issues.

    This system has been in place for 30+ years, which tells me it either works for them or nothing better has been found.

    I suppose it does “inconvenience” some but I am fortunate in that it doesn’t inconvenience me at all. I know what they do, I know how much I travel and I plan for it.

    I sympathize with people who have a tight budget, but I expect they have a huge number of challenges, not only hotel rooms. And yes, it is awkward when someone on a tight budget or with poor/no credit is expected to go on a business trip.

  • Carver Clark Farrow

    I paid $182/nt and this hotel is generally in the $250/nt range. (Weekends are more expensive)

    The other W (Westwood), as well as most of the other Los Angeles area Starwood hotels (I’ve been to all but one) hold an additional $50 per night and is in the same generally more expensive. $300/nt is the largest hold that I have personally experienced.

  • Carver Clark Farrow

    No, not really. If you find yourself in an NSF situation, that may determine 1)whether the bank honors your debits and 2)if so, whether, and how much, the NSF charge will be.

  • Carver Clark Farrow

    I agree. If you’re not a frequent traveler, you might now know that hotels place holds for additional amounts.

  • TonyA_says

    $100 a night for other stuff added to room rate and tax is quite normal.
    I am not sure where others here are getting $500 added to room rate. Maybe they are staying 5 nights?

  • TonyA_says

    Hopefully they will learn never to book a hotel with a debit card :-)

  • TonyA_says

    Then that is THEIR problem. I don’t want credit either. I am liquid. But I am flexible enough to understand how the travel world works. After all I sell it. I don’t intend to change the world. You do. Good luck on you next hotel stay.

  • Bill, likewise, we are entrusting hotels with $1000’s of our bank account dollars, too.

  • Carver Clark Farrow

    I’m a business attorney. I don’t see anything illegal or borderline in this.

    Most hotels that I’ve stayed at (generally 4*) hold an additional $50 per night. That seems reasonable to me. Say the room has 2 ppl. That $50 could easily be used up by:

    Room service
    Gift shop
    Wi-fi
    Restaurant
    Business Center

    Certain hotels such as the Residence Inn, which lacks all of the above (except wi-fi) rarely impose any additional hold.

    Alternatively, armed with the information in the article, a guest of limited means should proactively ask the from desk about not placing a hold in return for not having the ability to charge items.

    As far as discrimination goes, it would only be discrimination if the hold were outsized compared to what is reasonable in an attempt to discourage minorities from being guest (An Avis rental franchise did that). Even then it would be a very hard to prove. A better discrimination claim would be with regards to hotels which require a credit card for check-in such as the W. Of course, the first time I stayed at a W, they were hosting the after party for the NAACP Image awards, so that probably wouldn’t fly either.

  • Tonya, I figured you were in the industry from your vehement defense of the comments.

    I am not looking to change the world. I think this is an inappropriate practice and I think it should be ended. How about I charge you for things you are likely not to use. Sound fair?

  • Carver Clark Farrow

    One reason why hotels prefer the credit cards is because if someone charges more than the expected amount, they can add to the authorization. That is far more difficult with cash deposits.

  • Carver Clark Farrow

    Depends on the hotel. The nicer the hotel the less inclines they are to accept cash. One reason is that nicer hotels want to sell you things, food, gifts, etc. You are much more likely to purchase with a room charge than if you have to use a card or cash. Thus, the revenue system is geared towards credit cards.

    Cheaper hotels are more likely to accept cash.

    The darker side is that its a way for the hotel to screen potential guests. The thinking is that if you don’t have a credit card you pose a greater risk.

  • Carver Clark Farrow

    I don’t object to $100 per night if its reasonable under the circumstances, which I think is reasonable for a W hotel. $300/nt additional hold surprised me. I happened to check my cc and the entire hold was $500 even.

  • Carver Clark Farrow

    That’s a fair question. I suspect it is, because holds are industry standard and as such, the guest bears the burden of educating himself. As you may remember, contracts are interpreted in light of generally known industry standards and practice unless expressly superseded by the contract terms.

  • One of the many reasons I like Elliott is that he doesn’t stand for what we are able to just accept.

    I am personally shocked about how many of the respondents are of the position, “Eh, well…deal with it.”

    Seriously, where does it end? How much crap are you willing to put up with just to travel? Travel is an increasing inconvenience. I used to do 200,000 miles a year — just on the airlines that had programs that tracked it for me. It sucked then. I would NEVER do it now.

    I think the point of most of Elliott’s posts are: We are consumers, not contract obligations.

    Let’s be direct: Lawyers and contracts are for the 1/100% of situation that arise out there. But they are used as hammers to often abuse the 99.99% of the other cases — that’s where Elliott comes in. We are not contractors, we are consumers…it’s about time we were treated like consumers…rather than inconveniences, obligations and irritants.

    Do I sound like that monologue from “Network”? (I’m mad as hell and I am not gonna take it anymore.) Maybe. However, I am part of a growing body of folks who avoid travel and leverage technology…or drive.

    Not too long ago for business, I drove to Topeka, KS, rather than fly? Why? It was 8 hours each way by car. To fly, it was 1 hour to the airport, 1-2 hours early for check in, 1/2 hour boarding, 1 hour flight to KC, 1/2 hour to get a bag, 1/2 hour to get a car, 1 hour to Topeka. That’s 6.5 hours…assuming it all went off without a hitch. By car, just under 8 hours. Why would I trade that frustration for 90 minutes? That is 90 minutes that likely got sucked up anyhow with delayed equipment, etc.

    How does this relate to the topic at hand? Simple. Travel has no longer become a luxury. It’s a burden. This situation with the hotels is just another layer of guano that consumers must endure…and, increasingly, are avoiding. Even if the travel is for pleasure, the process between embarkation and destination is a chronic pain in the tokus. Take off your shoes, pay for your carry on…maybe ban carry ons…pay to be fed, pay additionally to stay at a hotel…get your miles skimmed because the 3rd Thursday after Valentine’s Day is an arbitrary blackout date or use 100,000 more miles just to use something you earned under a policy that was arbitrarily changed?

    So, I guess I am disappointed that more people are not bothered by this practice – as one more layer of guano – imposed on the consuming public that treats us like a burden and not a valued source of revenue.

    I value how I spend my money. I am disappointed to hear that others apparently devalue the marketability of the patronage so deeply.

    When did I wake up in Dystopia?

  • LFH0

    Industry standard would probably apply to contracts between persons in the same industry, but in this hypothetical we have a consumer as a party. Should a consumer making a hotel reservation be held to industry standards? Is it reasonable for a consumer to affirmatively learn about credit card holds, either by reading Chris Elliott’s report or from other sources of information? See, e.g., Last Time Beverage Corp. v. F & V Distrib. Co., LLC, 98 A.D.3d 947, 951-52 (2d Dep’t 2012) (“A party who seeks to use trade usage to define language or annex a term to a contract must show either that the other party was actually aware of the trade usage, or that the usage was so
    notorious in the industry that a person of ordinary prudence in the
    exercise of reasonable care would be aware of it.”).

  • TonyA_says

    Wow. I’m surprised that you still travel :-)
    I have to travel to SE Asia regularly. It takes about 22-24 hours each way.
    This ain’t a joke in coach. Sometimes I stay at hotels, sometimes I don’t.
    If I listen to all of Elliott’s rants I would not make it as well as I do today.
    So, I became my own expert. While I listen to many people, I’m intelligent enough to analyze whether what I’m told is BS or wisdom.

  • TonyA_says

    Carver, in the link I gave somewhere about Visa Acceptance Policy, they talk about a 15% rule. Unless you stay in a hotel where you can charge a lot of other stuff to your room (e.g. bar and expensive restaurants), it is hard to see how one can rack up more than 15% the room rate and tax.
    Hence if the hotel simply pre-authorizes the room + tax, the hotel can charge up to 15% more than that before it asks for another authorization.
    It is easy to see why an additional $50 amount held can go a long way for the hotel (if it only has to cover phone calls or the stuff in the refrigerator which is checked daily).

    Just like you I have never had this problem about holds. I have no idea what other people are doing to have this problem Chris is talking about.

  • It’s a life choice. I chose to get off the road. I used to alternate weeks : DEN-DFW, DEN-LHR-AMS/FRA/CDG, DEN-DFW, DEN-NRT-HKG. That was my month, every month.

    I got off the ride and the world seemed to proceed fine without me. But here’s the deal, how many other “me’s” are there? I chose to travel. I didn’t need to travel. (The position was then in-region sourced.) But how much revenue did (mostly United) lose? The ANA and Park Lane Hotels (both of which were INCREDIBLE, by the way), how much did they lose?

    I am sure my story is multiplied many times by business and personal travelers. There is a point where – in terms of optimizing activity – one achieves diminishing returns.

    The point of my position: These behaviors accelerate the approach to the diminishing returns frontier. And they disproportionately affect the 76% living paycheck to paycheck.

  • Carver, thanks for weighing in with an informative post. While I concede 4* and 5* are a different class – more of a destination lodging – the 2* – 3.5* do this as well. (And I think for the 4*+ accommodations, it’s really about guest convenience. So, I get that.)

    The discrimination angle would be based on statistical impact rather than actual discrimination. Recently, the Obama administration (I believe wrongly) started to develop the idea that neighborhoods that lack statistical diversity could come under deeper scrutiny regarding real estate and related practices.

    The core question: are minorities statistically, disproportionately adversely affected by this practice? Even if unintentional, it could open them up to a massive Federal or private class action suit.

    If the logic applied to the housing announcement were applied to this, I think hotels would be in some deep trouble very quickly.

    And again, the odds (and reality) of vandalism are ideas I dismiss as low probability events. And the issue of point of sale charging dismisses the guest account angle (in <4* accommodations).

  • Here’s a market appropriate angle:

    Instead of $250, charge $300 and offer a $50 refundable credit if unused. That way, the practice is disclosed in pricing and the consumer has a chance to shop the policy of the hotel.

    Does that sound fair and reasonable to all?

  • LonnieC

    Who voted “no”???

  • LonnieC

    I agree that there’s nothing illegal about this practice. I think the problem is that it just FEELS wrong. Somewhere in the hold is a statement that they don’t trust you to tell them what you’ve purchased/used/broken, and therefore they have to act as if you’re a petty crook. And that’s where the real rub occurs. No way it’ll ever change, sadly….

  • PsyGuy

    I routinely have holds have $200 when traveling overseas. Many time when traveling in China I’ve had to provide a deposit in the form of cash.

  • PsyGuy

    I see nothing wrong with a hold of $50-$200 depending on the hotel and its property. Having friends who are in the hospitality industry, some of the travelers you’d never suspect can easily go through a deposit or hold. Like the little old lady who sneaks her cat into a non pet room and then the room has to be professionally cleaned to make it suitable for those who might have allergies. According to m friend Kim, everyone tries to cheat on the mini-bar, such as the bottled water they thought was complimentary, or the shaving kit they thought was complimentary.

    My friend (Kim) and I were recently discussing when did the change occur when people began to believe that things that were not theres were assumed to be free, and not for sale.

  • LonnieC

    Oh, boy. You just stepped in deep stuff with that suggestion!

    That’s the very core of the discussion that’s been on Elliott for months, but in regards to airline prices. If one chain were to do that – “bundle the charges” – and the others didn’t, how much business would you guess that chain would lose? We’ve all pretty much concluded that most folks are looking for the lowest coat. They aren’t likely to check too carefully to see what the charge consists of. The hotel with the lowest (appearing) price will get the business. Too bad, but that’s the way it is.

    At least the suggestion in this article was that there may be some benefit in having such holds made clear at the time of check in, so customers are informed. Anything similar to what you suggested is (sadly) doomed to fail, I think.

  • PsyGuy

    A big difference as was mentioned in a previous post is the property a destination property like a resort were you can easily charge a LOT to your room, or is the property just lodging and the most your going to have is WiFi and minibar. When some portion of the industry has a policy that allows for greater capture of reserving funds they ALL follow in step.

  • PsyGuy

    You the consumer though are the one exercising choice, your asking to stay at their property. You have no right to be accommodated at their property.

  • PsyGuy

    Why should they, because they want to travel.

  • PsyGuy

    Sounds very fair, the hotel can refuse whatever services your offering and you can choose to stay somewhere else.

  • PsyGuy

    The same reason for every policy and rule created by every organization and agency in the world, reaction. Someone else messed it up for everyone else by abusing the system and good faith the industry extended.

  • PsyGuy

    Sovereign debt is an entirely different finance structure then consumer or commercial debt.

  • PsyGuy

    You assume cash was an option, and that there would not be a deposit in such a case.

  • PsyGuy

    Insurance costs money, and that cost must be absorbed by the business which they pass on to all guests, why should that burden be shared by all when it is easy to direct the losses and damages against the party responsible for the damage.

    If your friend borrowed your car and damaged it would your expectation be that the friend pay for the damage or would you just file an insurance claim?

  • Carver Clark Farrow

    Thanks for the invite. Alas, I couldn’t commit the time

  • Carver Clark Farrow

    Yes, that’s why I included the phrase generally known industry standards

  • PsyGuy

    It’s new to a number of people, and worth the time and effort to write about.

  • PsyGuy

    The phrase is “difference without distinction”.

  • Katt

    We recently went on a 3 week car trip and knew that with the rental car, and several hotels and motels along the way we were looking at a lot of held money on cards. We made sure that we had an amount in cash, and at several of the hotels we stayed at we explained the situation and asked if we could leave a cash deposit that would be refunded on check out. Only one of the hotels would not. It worked out well as we stayed at 6 different hotel/motels and a timeshare. We calculated that had we used a card at each place we would have had at least $2000 in holds waiting to be released. We travel quite a bit and I find there really is no rhyme or reason as to the quality of the property and the amount of the hold. I have seen $100 to $150 holds requested per night at moderate places and $50 for an entire 4 day stay at a higher end hotel. Just my experience.

  • Carver Clark Farrow

    I would assume that good business practices would dictate that a hold not be excessive otherwise you risk alienating guests. But it’s easy to rack up more than 15% in a large city.

    My weekend rate at the Westin Bonaventure runs about $180 including tax. 15% would be $27. Any of these would exceed $27

    Parking ($42.00)
    Bar tab for two
    Breakfast for two ($50)

    Room Service

    But, yes, if the hotel doesn’t offer those services then an additional hold seems unnecessary.

  • Carver Clark Farrow

    I agree that the vandalism angle is negligible. I find that when I stay at cheaper properties 3*, the additional hold is small. I stayed at a Courtyard that did a $25.00 charge. It had a small cafe that you could charge breakfast and other small items

  • sirwired

    Google says “distinction without a difference” wins by 2:1

    I win the internet today! Go Me!

    :D

  • Carver Clark Farrow

    I would think of it this way. The hotel doesn’t know you from Adam or Eve. It’s not running a background check on you when it lets gives you a room. Perhaps the hotel shouldn’t run an authorization at all. Just trust that you will present yourself at the front desk and pay your tab at the end of the stay.

    As one of those aforesaid minorities, I much prefer objective criteria.

  • TonyA_says

    So the hotel has to hold an additional $50-100 per night PLUS the room and tax. With the 15% allowance on top of that, the hotel is covered without having to ask for another authorization..

    When I stay at the Shangri-la in Asia, I or we sign a separate agreement to pay for the (large) additional charges upon check in. I don’t think the even get a pre-auth on the card.

  • Carver Clark Farrow

    Much of the travel drama have limited affect on business travel. Leisure travel, sure, but not so much for business traveler.

  • TonyA_says

    I agree. Maybe I just don’t know anyone who uses a debit card for business or serious leisure travel (lodging expenses). Most of the people I know want to earn points and miles so they have credit cards :-)

  • PsyGuy

    Depends where your staying (Tokyo) and who you are. Debit cards are not popular here at all. Most transactions are paid with cash or use their IC card (the metro card functions as a preloaded value card). Even online shopping uses prepaid transactions, you make your purchase on Amazon print out a remittance slip and take it to a convenience store where you pay the balance in cash, and the receipt has a code on it, you input into amazon, and then your stuff gets delivered.

    Most people have a credit card, but unless your a Ginza girl or your shopping in Omotesando you just don’t see credit cards often. A group having a betopati (private party) the organizer will still pay with a stack of cash. CC’s come out when people are trying to impress other people, but otherwise its not really happening. Apple Pay is getting almost zero traction or interest here. Not only are many merchants just not set up with POS systems to handle CC transactions, but there is such an ingrained infrastructure that already supports current payment models. For instance there is an app you can download that lets you use your metro IC card account with your iPhone. It needs to be connected to your bank account, and it’s not hard to do, but almost no one uses it (it doesn’t actually let you scan your iPhone in replacement of an IC card, it just allows you to recharge/refill the card through your phone, you still need the card but you can keep it in between the case and the back of your iPhone so it “looks like” your using the phone).

    As far as hotel holds and authorizations it really depends who you are. If your Japanese and your resident, hotels wont ask you for a deposit at all, and wont authorize anything beyond the actual charges. If your a foreigner and your resident, and you pay with a Japanese bank card there likely wont be any deposit or holds. If your a foreigner and your resident and you pay with cash or a foreign bank card it depends on the property. At most you might have a 100,000¥ ($100) deposit or hold, though the standard is typically the equivalent of one extra nights/days stay.
    If it’s a luxury or resort type property than $200-$500 hold authorization is common.
    There is a reason however, in that outside the boutique (possibly) there aren’t POS systems for CC transactions. The resort uses one system for all resort related transactions. So if you eat in the restaurant or have a drink in the bar or use the spa or a ski lesson/rental you have to basically charge it to your room. They don’t have the capability to process the CC transaction at that location. Sometimes people (foreigners) want to use separate cards because one is a business card and one is a personal card, and someone has to run up to the main desk or use the phone to authorize the transaction, which is burdensome.

  • TonyA_says

    I thought I might ask you, do you check your CC account after every check in? I never do because I make sure I use a high CL card whenever I travel. I’m sorry but if one is too worried about a $518 authorization hold and can’t wait a few days for it to drop, something is quite wrong with that person’s finances and should consider staying in a cheaper place. Maybe they can stay with friends and family :)

  • Carver Clark Farrow

    I’m not sure I get the point. Yes, the hotel holds $50-100 per night. If those aren’t enough it appears that it has another 15% it can obtain at check-out without further authorization.

  • TonyA_says

    I think you get it. If the hotel has no other services to offer then it does not have to add anything else since 15% of room + tax should be enough to cover incidentals.
    But if the hotel has lots of other services, then they will have to ADD an amount to hold to the room + tax at check in because they do not want to be in a position to keep on asking for additional authorizations during the stay.

  • TonyA_says

    Are these amounts $100-$150 per night in addition to room and tax?
    If so, how much was the room rate?

  • TonyA_says

    Remember the poll changed. This was not the question early in the morning.

  • PsyGuy

    At check in, no. I do when I check out to make sure the charge actually corresponds to the actual bill. The only time I ever had such a high hold or pre-authorization was when I was staying at a beach resort in the South Pacific, but it was one of those places where they charge everything to the room, and it wasn’t an all inclusive resort.

    I’ve heard some cruise lines will pre-bill or charge something like $500-$1000 for use on board ship, but they could just be confusing a hold/authorization with the purchase of actual onboard ship credit or something.

  • Carver Clark Farrow

    I didn’t think that the hotel needed me to add additional authorizations to my card. I’ve seen additional authorizations appears when I make a larger room charge, like room service dinner (crappy food, overpriced, all bad)

  • TonyA_says

    The more I read this thing, the more I think this is nothing but a credit impairment problem masquerading as a travel customer service problem. Anyone who has high enough credit limits (due to a decent FICO) should not have these issues.

  • Bill___A

    Point taken. However, it is generally not that much at a time. Also, I try not to do business with places I don’t trust to a certain point.

  • PsyGuy

    I didn’t want to say it, but it’s basically an “I have bad credit, but treat me like a rockstar anyway” whining issue.

  • PsyGuy

    That in itself is a difference without distinction.

  • Katt

    The rooms were usually about $50 to $60 a night with tax. The $100 to $150 was the room amount plus per night. One example was in Las Vegas. We stayed at the Golden Nugget at $45.00 per night, the hold on my credit card was for $550.00. We were there for 4 nights. So about $140.00 per night deposit. We recently stayed at the Mokara in San Antonio and the rooms run $300 a night, the hold on my cc for 2 nights was $50.00 total. That is why I say in my experience, there really is no set rule or rhyme or reason to how much they hold. Just depends on the individual hotel.

  • PsyGuy

    I voted no, and after the poll change. If properties have to disclose their hold policies, more travelers (who only have debit cards or low limit cards, also known as deadbeats) will argue with the front desk, which increases the amount of time I have to spend at check in waiting.

  • PsyGuy

    That’s the vegas premium. That vegas property has to insure you won’t be busted in a narco deal gone wrong, and the room sealed as a crime scene, in which case they will massive loss of use damages.

  • PsyGuy

    Agreed, if your on an expense account and have a corp card anyway, who cares what the hold or authorization amount is, that’s something for accounting to stress over.

  • PsyGuy

    I use a debit card for business a lot, it’s how I get cash. American ATM cards, assuming you can find a bank that even issues them anymore have limits on which networks you can access, which once overseas can be very difficult to find. If your debit card has a V/MC logo on it you can pretty much use it in any foreign ATM overseas.

  • TonyA_says

    Thanks for answering. Wow, I wonder why Golden Nugget holds are that high.
    Were any of these stays prepaid?

  • PsyGuy

    I’m with Carver on this one, the property is essentially trusting a stranger with their room, and any business is going to want assurances of payment against damage or other services, regardless of how small the risk is or actually appears to be.

  • PsyGuy

    Pay per view.

  • PsyGuy

    Those properties (without services and amenities) are also the ones most likely to have damages or cleaning costs, etc to their rooms.

  • PsyGuy

    Not really, a $60 room at a motel with no services, no extras at all is only collecting $9 against damages, and $9 won’t fix or clean anything. Something simple like vomit on the floor is going to be $30 in costs just to steam clean/shampoo the carpet.

  • PsyGuy, why are people with low limit cards or debit cards deadbeats?

    There are many I people I know who grew tired of cards yanking their rates from 10% to 30% during the financial crisis who said, “Screw this, I’ll get rid of my cards.”

  • What if it were required across the board? I am a free marketer, but the problem is that the information presented in lawyer-ese and then used as a gotcha.

    I have more of a problem with the fact it’s a surprise fee than a “shop-able” item.

    In real estate, it’s about disclosure, disclosure, disclosure. Why not in financially related activities too?

  • LonnieC

    Except that the hotel already has my name, address, phone, auto make/model/license plate, driver’s license, etc, and my credit card number. Certainly it should be able to confirm that the card is good, and even hold the total amount of the room charge to which I’ve already agreed. But it’s that little extra that adds the mistrust element to the transaction, and feels like a trespass.

    After all, I would imagine the same arguments could justify any other retailer doing the same thing (Gee, they don’t, do they?). Restaurants could put an extra hold on my credit card, so that after I’ve left they can count the silverware, make sure I didn’t steal the A-1 sauce, trash the men’s room, etc., etc. Home Depot could do it, in case I shoplifted something or broke some stock. Or my grocery store could protect itself in case I ate something without paying, or dropped the applesauce. Whatever. Put an extra hold on my card. (Okay, that’s reductio ad absurdum, but I think the point is valid.)

    I’ve said enough….

  • TonyA_says

    Sorry I don’t have a debit card. I still have a Bank of America and Citibank ATM cards. That’s all I need to get cash in the NYC area. Most of the time I just charge everything to my credit cards so I don’t need a debit card.
    I keep quite a decent amount of Euros, Yen, So Korean Won, Hong Kong Dollars, Chinese Renminbi, and Philippine Pesos in my safe because these are the places I travel often. I keep them in separate wallets and replenish them when I leave the country. I don’t like using foreign ATMs so I just take enough cash. Call me strange but I have been traveling internationaly since the late 60s. Back then, I hoarded travelers cheques.
    I can travel in a moments notice without having to go to a bank or ATM. Anyway, knock on wood, I have never had the issues talked about here especially credit card authorization holds. I remember paying cash in cheap Days Inns and if you did not leave a deposit, they simply didn’t give you a phone connection. So not all my stays are luxurious :)

  • Hmmm…let’s see…even in a larger corporation, 500 employees tying up $500 per week is $250,000 in credit lines…methinks that is a meaningful amount of money.

    It could be the difference between making payroll or not if other funds need to be directed to the cards to open up the ceiling…

    70% of businesses are small businesses…so they don’t have unlimited credit lines. And even large corporations rake money over during the period of purchase until the verification and submission of travel vouchers. Overstated balances adversely affect that too.

  • TonyA_says

    WTF is a free maketer?

  • PsyGuy

    You know a lot of deadbeats.
    Pay your bill during the grace period and the interest rate is zero. I always pay my bill before incurring interest, and as a result I can ignore whatever my bank interest rate is (which I looked up and is currently11.2%).

  • Someone who believes in the Milton Friedman body of work. “Free to Choose” (Google it. It’s 10 hours of great television that explains free markets. It’s viewable online.)

    I am not a fan of government regulation. However, I am a fan of equal disclosure to permit consumers to shop knowledgeably.

  • TonyA_says

    Your logic is wrong. Those are unused credit lines anyway. Irrelevant in the whole discussion.

  • LonnieC

    Oh. Okay..

  • Yes, they were prepaid by the excessive hold on the account. At $2000 that’s nearly 40 nights at $50 per night. Even God didn’t keep Noah on hold for that long.

  • PsyGuy

    God knew where to go to collect if he needed too.

  • PsyGuy, I think you are the guy who lives in Tokyo now, if memory serves.

    During the financial crisis, many people had their interest rates jacked up and their credit lines crammed by 50%-75%…people who had credit scores in the 730+ range. Some had their payments tripled. Not all were deadbeats. About 1/2 were normal people that were Chase and Wells Fargo customers.

    Well, my interest rate is 7.8%. I guess that makes you a deadbeat, PsyGuy.

  • LonnieC

    Okay. That’s different. Requiring it across the board is something that would provide a level playing field, and might work. That same kind of thing might work with airplane seating minimums as well. Once all of the players have to compete on the same standards, reasonable comparisons could be made.

  • So, if a corporation has to bump up its credit line, or has the balance of its unused credit lines adversely affected by $250k (in holding charges), that is wrong and illogical?

    Sure, Tonya. If you say so.

  • PsyGuy

    Yes I live in Japan.

    If your interest rate increases by 75% and you owe nothing or pay your bill during the grace period you pay zero interest. If you owe nothing your credit line doesn’t get crammed. Tripling a payment of zero, is still zero. Tripling a payment means nothing if you pay your entire balance monthly.

    It’s called not spending what you can’t afford, living within your means, personal responsibility.

    That does make me a deadbeat compared to you, and makes you a better person than me.

  • PsyGuy

    Thats good too know, I didn’t realize that BoA still issued ATM cards, they didn’t last time I considered opening an account with them.

    A lot of Asia is still very much a cash dominated culture. CC’s are good for air travel and that’s about the typical expense use. The last time I used a CC in Tokyo for a daily expense was for Tajima-gyu beef in Roppongi for my fiances birthday.

    What are travelers cheques? Is that like an international checking account?

  • Alan Gore

    So the Japanese still pay for everything with mountains of cash? This was what impressed me the most when I was new in Tokyo – that it safe to do so, in any part of town. That and the only credit card that was accepted everywhere was Diner’s Club, which had already fallen out of use in the US. Do they still use DC?

  • PsyGuy

    There are restaurants abroad that swipe your credit card before seating you, and I’m not referring to a buffet. Its also more common in the States, from what I hear, of restaurants pre- authorizing the card to include an 18% tip.
    Start a tab at many bars and they will pre-authorize $50.

    All of those other retail transaction home depot, grocery stores, etc all accept payments at the end of the transaction, not the beginning such as you have with a hotel. You may walk into your local market and not buy anything, but if your staying at a hotel property you are certainly engaging in a transaction.
    In China, I used international hotels as resources for a lot of different things from sending a fax, to getting a hair cut, even buying breakfast cereal. I could go in and have a drink, watch BPL, do the things I needed and didn’t have to pay or present a card to access the property.

  • PsyGuy

    I don’t know what dinners club is, I’m sorry. Most places that take CC’s are V/MC/AX, AX is more popular here than in the states (the only place in the states I ever use my AX is Costco). I don’t see Discover, though hotels and travel agents have a likely probability of accepting discover. CC’s here are mostly bank issued cards, and by bank I mean your retail bank, the one you have a deposit account with. You don’t have financial institutions like “Capitol One” that primarily provide CC accounts/services. If your banking account is with MUFG orUFJ that’s who your going to get and have a credit card with. If you bank with Renova or JP bank UFJ isn’t going to open a bank card credit account for you.

    Mountains of cash well yes and no. Most large size transactions are done by bank transfer. So a property loan is just going to be done by transfer from one account to another. I pay my rent by bank transfer, because its a fixed expense each month, and I hate doing the bowing and holding of the stationary envelope and thank you’s and the chopping of the remittance receipt. Though the tea is nice, the fact that my land lord is only available during the day, I just am not available during the landlords working hours.

    I pay my utility bills by bank remittance, which is done at the ATM (ATMS in Japan do a lot), you put your bills into a reader, and either deposit cash, or approve the deduction from your account, and then the bill is printed with a stamp and a receipt number on the bill. My mobile phone is paid by bank transfer because it’s the only option outside of a credit card, mobile companies only offer billing for commercial business accounts. My gym membership, cleaners and housekeeping services are all done by bank remittance as well. My grocer service is done by bank transfer. I use cash for my metro card.

    Bricks of cash are still common, we were at a wedding reception in Americas park that the groom gave the wedding planner an envelope “brick” of 4,000,000¥ for the event in cash. People buy cars with cash. It’s a daily occurrence to see woman go on 200,000¥ shopping trips all in cash. I carry 100,000¥ on me regularly.
    It’s very safe to do so, about the only place to really be careful is in Roppongi and down in Okinawa. The Nigerians are more interested in stealing iPhones than cash, as your far more likely to have your phone in front of you on the table than your wallet/money clip/pocketbook.

  • PsyGuy

    Assuming all 500 employees are traveling and it is $250,000 it’s not money, it’s credit access. The hold which is added then removed at settlement is essentially a zero interest loan to the corporation, they lose nothing.

    No one is making payroll on their corporate credit accounts, if they are they have far bigger problems than pre-authorization holds.

    Small businesses don’t have 500 employees. The definition is less than 50.

  • Alan Gore

    There are Nigerians now? In my day (1974-78) Roppongi was an upscale dining and clubbing district. But there was absolute personal safety everywhere, in grimy Shinagawa and Shimbashi to the neon noon of Shinjuku to working-class playground Ikebukuro. I would hate to think that this has changed.

  • MarkKelling

    Then don’t use a debit card.

    Debit cards are evil. Pure evil. I never use one except to get cash out of my bank’s ATM. I have never bought anything with it, never will.

  • jet2x2

    I am so glad you did this article. I never had a problem with this issue until two recent trips.

    First trip – no notice about authorization hold except in the (very) fine print when making the reservation. I asked at check in and got a vague answer from three different people, that was basically one night plus up to $50 for incidentals. That should have been about $250. For numerous reasons I had to stay at the hotel so I checked in. Instead of a set dollar amount at the start of the stay they authorized different amounts all week, sometimes two in a day. Some were uneven (with dollars and cents). I never got an explanation from the hotel as to how these were calculated and the employees seemed flustered that anyone even asked. All they could do is blame the computer system. It took about a week after I checked out for the charges to drop off.

    Second trip – another seminar – I was on the hook for two nights of a 5 night stay, the rest was paid through the seminar organizers, including 3 meals a day at the hotel. When I checked in they mentioned authorization and said it would be one night plus about $50 for incidentals. Room was $179 a night so I figured maybe $400 in authorizations. I was shocked when I found that they put $1300 on the card.

    There should be full disclosure, at the time of reservation, that there will be authorizations and the specific amounts. If they can’t give an amount because the time period of the stay isn’t set, they should disclose the formula used to calculate the authorization. They should also disclose the exact amount at the time of check in and how it will be charged to the card. Then it’s up to me, the consumer, to decide whether to stay there and if I do, to remember to check my card regularly to ensure that I am under my credit limit.

  • Judy Serie Nagy

    Carver’s right, some guests are not concerned with a hold, they have large credit lines and, in the case of AmEx, no limitations on their spending. People who are concerned about limitations on their ability to use their cards while travelling should ASK when they check in. My concern is: does the front desk know the answer?

  • MarkKelling

    The only “minorities” disproportionately impacted by holding funds are:
    People who are close to the limit on their cards
    People who use debit cards

    Neither of these is a “minority” as defined by law.

  • MarkKelling

    Restaurants do put an extra hold on your credit card.

    They routinely add at least 20% when you hand your card to your waiter and he brings back the slip to sign. You usually don’t see this because as soon as they enter your tip into the CC machine, it releases the hold.

  • MarkKelling

    Traveller’s cheques are a thing everyone used to be told to never leave home without.

    Several companies (American Express and Thomas Cook were the two largest) would sell you a bunch of checks in the local currency of where you were traveling to. They were denominated in handy amounts like $20 and $50 or GBP or EUR or whatever. You signed in one place on the check when you bought it and then in a second place on the check when you used it. The merchant accepting the check would give you the remainder of the amount back in cash. Or you could go to any bank and cash them. If you lost them, the issuer would replace them for no additional charge.

    With the global acceptance of Credit Cards, the traveller cheques fell out of favor. It was too easy to counterfeit them. In many countries you were required to pay a tax when you cashed them. Now it is nearly impossible to find anywhere to use them except to cash at a bank in most places I go to, but you can still buy some if you want.

  • jet2x2

    When I was researching this issue after my first experience with a ridiculous authorization hold, I may have found the article you saw. The family was on a two week trip and stayed at the same resort in Arizona that did the random holds on my card (see other posting I did). They were on their way to another state and did not have enough on the credit card to charge a rental car because of the holds. They had to beg the resort to release the hold early so they could rent a car. Unfortunately I can’t find it.

    I am torn on this issue because I am not a fan of government regulation either. At the same time I don’t think it’s right to tell people that they are totally responsible for ensuring against problems caused by these holds when they aren’t given the information they need to protect themselves. I get that businesses need to make money and limit their damages from “deadbeats.” But why should people need to plan for possibly several thousand dollars in extra pending charges on their credit cards just to take a vacation? And yes it can be very high – as I posted on another thread here, I had a $1300 authorization for a 5 night stay where I was only responsible for 2 of those nights and meals for those days (all the rest paid by seminar in advance) and the room was $179 per night.

  • jet2x2

    In my experience on two recent trips the answer is no, and in one case two different managers could not explain the formula for the holds either. They blamed the computer.

  • ArizonaRoadWarrior

    The reason for the ‘premium’ for Las Vegas hotels are how people act in Vegas, the damage that they can caused as well as the possibility that they might do cash advances on their credit cards if they have bad lady luck at the casinos.

  • Jeanne_in_NE

    I’m very much enjoying your analysis, but it’s Tony A., not Tonya. Back to reading the rest of the comments now . . .

  • ArizonaRoadWarrior

    “So, I guess I am disappointed that more people are not bothered by this
    practice – as one more layer of guano – imposed on the consuming public
    that treats us like a burden and not a valued source of revenue.”

    This practice of ‘extra’ credit card authorizations is the result of people ‘abusing’ their properties and/or ripping off their properties. There are some hotels that require their guests to check out at the front desk, irons and hair blow dryers because too many guests were stealing them. Over the Thanksgiving holiday, we stayed at the Hyatt hotel in Santa Barbara where there was a list posted in the room showing you what items you can take with you for free and what you can take with you that you will be charged.

  • ArizonaRoadWarrior

    If anyone was honest and forthright then there is no need for this practice. That is not the case there are scammers and destroyers; therefore, the need for this practice.

    I have rental properties. A potential tenant must go through a credit and criminal background checks…submit references…provide a proof of income (paystubs or tax returns for the self-employed)…even with all of this, I still require the maximum allowable security deposit (1.5 x the rent) because a tenant can cause thousands of dollars.

  • ArizonaRoadWarrior

    First, most policies have deductibles which probably starts in the thousands. Therefore, for damages under $ 2,000, they are paying for it.

    Second. the cost for insurance and the cost for repairs are going to be adjusted in the room rate.

    Third, when you have claims, your rates usually go up.

  • ArizonaRoadWarrior

    As a matter of fact, Chris asked me to write for then sister site, Consumer Travelers, back in March 2010. He sent me the contact at CT and I forward Chris’ e-mail to the contact but never heard back from Charlie.

    Also, I gave Chris the suggestion for the feature “Is this enough compensation” for this blog back on September 25, 2010.

    I still have these e-mails if any one questions the validity of these statements.

  • ArizonaRoadWarrior

    Thanks for the invite but my schedule doesn’t have the time for it.

  • Grant Ritchie

    It’s just the darndest thing how people who don’t have time to help always seem to have time to make multiple posts picking holes in Chris’ coat.

  • Carver Clark Farrow

    That’s just silly.

    Taking on the responsibility to assist in editing is a serious commitment. One not to be entered into lightly. Posting takes 30 second and can be done on the fly.

  • Carver Clark Farrow

    Well, not exactly. All things being equal, statistically, lower income folks tend to have more challenges regarding the established financial systems, whether it’s lower credit limits because of fewer assets or less access to banks (fewer banks in poor areas), etc. Moreover, there tends to be a racial correlation with income, i.e. minorities tend to have lower incomes.

    That’s the basis (I assume) behind mjclaxden disproportionate impact comments.

    Off-topic. For example, there was a civil rights case I read (eons ago) about a company that would create artificial barriers to limit the number of minority applicants. They would apply a seeming race neutral criteria, that was irrelevant to the job, but had the impact of eliminating many minorities from consideration.

  • ArizonaRoadWarrior

    First, I have helped Chris by giving him the suggestion for the feature “Is this enough compensation” for this blog back on September 25, 2010.

    Second, posting can take place anywhere…on a plane with wi-fi; on a boring conference call; on hold for a call; in a taxi cab; at an airport lounge; riding in a car as a passenger; etc. as well as takes little time. By the way, several of my posts are between 11:00 PM and 8:00 AM.

    Third, editing has strict deadlines which I could probably not meet given my current schedules and projected schedules for 2015.

  • bodega3

    People with low limits on credit cards are either new card holders with no credit history or those with lousy credit history. You should never carry a balance over each month and pay your bill off before the due date each month if you want to move up to credit worthiness. Debit cards are a bit different due to protecting you from having your account drained. I always tell my clients to not travel with a card that is close to their limit.

  • bodega3

    I still travel with Traveler’s Cheques. I use them as a back up. We take 3 different credit cards, 2 ATM cards, US currency, local currency with just enough to get started and traveler’s cheques as a back up.

  • Carver Clark Farrow

    I don’t think any of those apply. I’m sidestepping the criminal activity because I agree that’s generally not a major concern. But the hold for incidentals is appropriate.

    When I go to a restaurant, Home Depot, the grocery store, etc. Those transactions are settled contemporaneously and no credit is extended.

    Whenever someone is extending credit, it’s appropriate for the creditor to know whether the purchaser is good for it. Wouldn’t you agree? When you go to the doctor, they verify insurance before they see you. When you go to an attorney, they often take an initial retainer to insure fees are paid.

    It’s different when you obtain goods and services and pay for them later, e.g. at check-out.

    Having a credit card on file is no assurance that the hotel will be paid. I’m going on a 7 day vacation shortly. I will probably eat breakfast at the restaurant, I may charge a few items at the gift shop, maybe splurge for room service once or twice (no, not really) etc. The hotel doesn’t know if I have sufficient additional credit to pay those amount. I may have every intention to pay but suppose my limit is low and I miscalculate how much credit I have left. Perhaps since I’m traveling the fraud department freezes my card thinking someone stole it.

    Perhaps a guest should have the option of turning of all credit in lieu of having the extra hold. No internet, pay-per-view, room charges, etc.

  • bodega3

    That happens in a lot of businesses already. You don’t see the costs, but they are already factored into the price you pay. You go to Macy’s but don’t use the dressing room to try on those pants, but you are paying for the use of the dressing room. You go to the grocery store and don’t use a cart, but the cart has been factored into the price of the items you are buying. I use to do a lot of youth sports travel reservations for tournaments and had to have hotels provide with the cash qualifying amounts they would charge for those not using a credit card at the time of checkin. It usually ran $200-$400 for a two night stay per room, refunded at time of checkout once the room was looked at.

  • Carver Clark Farrow

    Agreed. The bad behavior of a few spoils it for all of us, since you can’t spot the bad ones beforehand.

    I came from a very sheltered background (no surprise), When I worked for a criminal defense firm, I was shocked daily at some of the s**t that people pulled and believed was ok.

  • bodega3

    Because there are issues during your stay or rental and they need a way to collect. Very easy to understand IMHO. Debit cards are not good for travel…period. Both Tony and I deal with this with clients and I don’t advise using one, but have a credit card. If you have good credit, you can get a card with no fee and pay off each month.

  • bodega3

    If you don’t like it, don’t ask to stay in a hotel room. Seems pretty simple. I have dealt with lower income people and it is difficult for them. They want to use cash in a credit card world. I can’t and won’t issue a ticket without a credit card. I won’t make any reservation without a credit card and will charge a fee if you use a debit card and don’t know you limit and something gets declined. Debit cards are pain in the travel world.

  • Carver Clark Farrow

    My guess is that was more of a system limitation issue than anything else, since you were responsible for some of the room nights, it couldn’t figure out how to separate out the different rates. Basically it meant to hold $50/nt which is very reasonable.

  • Carver Clark Farrow

    If a company employs 500 employees that are staying in hotels 5 days a week, $250,000 is chump change.

  • Carver Clark Farrow

    I’m not seeing the benefit. Why not charge the $250 and disclose the $50 hold.

  • Carver Clark Farrow

    No arguments from me. I believe that one of the governments best functions is its ability to require disclosure so that consumers can make an informed decision.

  • Carver Clark Farrow

    One thing that’s difficult is that is you charge something many hotels will increase the hold. So if you have a $50 hold and charge 34.56 worth of stuff, you may find another $34.56 hold at 3am.

  • Carver Clark Farrow

    Yeah, I won’t take cash in my business either. I’ve made clients go to 7-11 and get me a money order.

  • LonnieC

    Yes, but: The tenant expects a security deposit – it’s a way of doing business and everyone does it. That’s substantially different from a “secret” hold – possibly in the hundreds of dollars – which the customer is never told about and may not suspect.

  • Carver Clark Farrow

    The guest should be told.

  • PsyGuy

    Well Roppongi hills is upscale, but most of the hottest clubs in Roppongi like Feria and Muse have a lot of nigerians, and you find a LOT of hostess bars and lounges run by nigerians. There are a lot of nigerian touts who will harass you with the “looking for girls”, “you want to party lines”.

    Shinagawa (Shittigawa) is still pretty grimy (I only go to Shinagawa to go to immigration) Shinjuku is business bars and college students. Ikebukuro is seedier, its the dark ally where the soap bars and the grittier hostess clubs are. Its not a destination though. Ueno is tourist town.

  • Common sense

    This problem’s got a limited shelf-life. All US merchants are required to be chip and PIN compliant by October 1, 2015. (Failure to do so will result in most fraud charge backs being borne by the merchant and not the banks.) Over here in the UK where chip and PIN is already bedded in, when a hotel preauthorizes against your card, you have to enter your PIN to approve it and the machine displays the amount they are trying to hold. This gives you the chance to at least challenge the amount if it’s too high (but invariably it isn’t because they don’t take liberties).

  • Jim

    You have never heard of Diners Club?!?! Wow I’m shocked. I’m not trying to say anything negative, but I’m well under 40 and know about that credit card.

  • Carver Clark Farrow

    Off topic. Could you point me to the reference for

    Recently, the Obama administration (I believe wrongly) started to develop the idea that neighborhoods that lack statistical diversity could come under deeper scrutiny regarding real estate and related practices.

    I’m trying to wrap my head around that

  • Carver Clark Farrow

    How does a chip and PIN card handle situations where the card is not physically present, say online purchases, recurring auto-debits, and expedited car rentals like Hertz Gold Club?

  • Grant Ritchie

    Granted… posting a single short comment takes thirty seconds. Posting multiple long, argumentative, comments day in and day out takes somewhat longer. Perhaps as long as it would take to edit an article?

  • john4868

    @CarverClarkFarrow
    What’s silly is commenting on a time commitment before you know how much time its going to take. Since we edit “by group,” there are days where I can’t make it to read a story or stories before Chris goes to print. There are other days that Chris asks us to read multiple stories and I spend maybe 30 minutes reading. There are also days when Chris doesn’t have stories for us to edit.

    All of which I can do from my phone or at my desk.

  • I will look that up. It came out from NAR and our local board in the past 6 months. I am doing real estate development, but keep my license active. So, give me a day or two and I will get that replied here.

    Michael (mjclaxden)

  • MarkKelling

    If the cheques work for you, then that is great.

    However, the last time I took some with me (about 8 yrs ago in London), it was practically impossible to use them. The hotel refused them. No merchant would accept them even if it was partial payment for something with cash for the rest. The three banks I went to each wanted to charge me 10% to cash them. Finally found an American Express office but was only allowed to cash 100 GBP per day. That was enough, but had to start each day with a stop at the AmEx office.

    At the time, the ATM card I had was not useable outside the US (didn’t find out until I got there since the bank didn’t think it important to tell me that when I informed them of my travel plans) and I didn’t want to pay the excess credit card fees for foreign transactions. Both issues have been solved because my ATM cards and credit cards now both allow fee free foreign transactions.

  • MarkKelling

    You are thinking in terms of a debit card. A credit card hold does not impact the actual line of credit. Yes the funds are not useable, but they are not removed from the account or added to the balance due when a credit card hold is placed.

    Having a business credit card with a higher limit does not cost the company more unless the actual balance owed goes high and is not paid. The authorization holds on credit cards do not impact the amount of interest charged by the card issuer.

  • MarkKelling

    It doesn’t.

    When you are buying online or in any card-not-present situation, you are back to typing in the card number, expiry date and the 3 digit code off the back of the card.

    I used a chip-n-PIN card to reserve a hotel room in Paris, France last summer. I provided my card number on the web site and they generated a hold for $500 over the one night room rate. This hold expired in 7 days but my arrival was still a month away. Had no problem once I got to the hotel. Gave them the same card at check in and no hold was done. Paid at the end of the stay and they took exactly the amount due.

  • bodega3

    I buy AX ones. There use to be a place to get Thomas Cook ones, but they closed. In CPH we cashed them at a bank. In EDI no bank would touch them and we had to go to the post office. Most every other place I have used an AX office, which are far and few these days. It is just peace of our minds that we have these as back ups. Not a fan of ATM’s so we are careful where we use them. I always have a minimum of $50-$100 of local currency to get started. One trip we had 4 different currencies to deal with. In Switzerland I have cased the checks at the train stations, which gave us the same rate as the banks. Last trip to CDG I cashed some at the airport. Didn’t want to deal with the ATM there. I am ok with the extra cost for the comfort and ease. I have had client have their wallets stolen, their ATM cards eaten by the ATM machine and their credit cards compromised. So I like to be prepared with options.

  • MarkKelling

    I love ATMs, especially those in Europe. That is where we really differ. :-)

    Most European countries I have visited do not allow ATM surcharges and my main ATM card does not charge me any fees for withdrawals anywhere. This means I get my money at the network published rate which is the same one you see when you check on Google. I do look closely at ATMs to make sure it is a bank operated machine and not one run by a foreign exchange company. When the ATM says if will offer you a rate, cancel and move on. I always refuse the “convert to home currency” convenience option because the network gives a better rate than the ATM operator bank does. Taking these steps saves me a lot over any other method I have used to get money while in a foreign country.

  • bodega3

    We don’t use an ATM here at home, so using one in a foreign country isn’t comfortable for us, but we have used them. We take our card.

  • AH

    i’ve had holds place on my credit card all the way back to about 1996! they are nothing new at all.
    the first time i remember a hold was when i purchased gas at a self-serve pump and, even though i only purchased about $15 worth of gas, my “hold” was $25. scared the hooey out of me that they were locking up that extra amount of funds – and back then it seemed to take a week for the hold to be released.
    now, i expect that anytime i swipe a card, a hold is going to be placed on my account for the amount of purchase. not a problem, it clears quickly and i’m not bothered since i know that i’ve “spent” that money.
    but i think the key here is “purchase”, not “potential” purchase.
    sure, go ahead and put a hold on my “base fare”, but not for a ton of extras just because you can even if i don’t ever use or charge the “extras.”
    the hotel or whatever still has the credit card on file to be able to charge for extras. but they don’t need to tie up credit just because they can.

  • jet2x2

    Carver, perhaps you can make sense of this one. In the first example, a resort, they authorized $300 at check in and then the following amounts: 84.56, 217.28, 100.64 and 133.92. The first two on the list were on the same day. Total authorized was 836.40. I did not charge anything to the room the entire stay and neither did my roomie.

    In the second example the projected hotel bill for my personal part was about $360. They authorized $1300 the first night. On this one, for a 5 day stay all meals and the room were already paid for 3 days by the seminar. Even if they authorized $100 a day for “incidentals”, $1300 seems excessive to me.

  • Off-topic slightly – Here is where IBD terms it “Now, even ZIP codes are racist”. http://news.investors.com/ibd-editorials/072213-664703-hud-maps-suburbs-in-new-diversity-project.htm (referring to Shaun Donovan’s speech)

    The point of this assertion as it relates to the thread is that there appears to be policy being laid for litigation for statistical evidence of racism, rather than specific evidence. That is where hotel chains have some exposure in the hold policy issue, I believe.

  • TMMao

    Some property management systems (PMS) will automatically place authorization holds based on the room charges outstanding at the end of each day. For a multi-night stay, if the guest charged $100 in incidentals on the first night, then $100 (plus the room rate+tax) is added to the authorization hold when the end-of-day procedure is run. If there are no further incidental charges over the remaining nights, then only the room+tax is added each night to the authorization hold. The goal is for all of the nightly authorization holds to equal the final bill at check-out. If the hotel doesn’t place an authorization hold or underestimates the final bill and the guest’s credit card bounces at check-out, it is a hassle for both parties.

    Occasionally, if the authorization holds are mismatched or the guest chooses a different method of payment at check-out, their credit card available spending limit can be tied up for 5-8 BUSINESS DAYS until the hold expires on its own. No amount of contacting the hotel’s credit card processor or even the customer’s bank will necessarily speed up this process. I should know because I have been on the receiving end of customers that are stuck without any remaining credit limit. A lot happens behind-the-scenes with people’s credit cards that never appears on the monthly statement, and authorization holds can be a nasty surprise.

  • Jason Hanna

    Correct, however.. Where the problem comes in, and I deal with this quite often here in the Point of Sale industry.. Is how long after the merchant releases the hold that the money is returned as available to the customer. We have bars with our system who want to do a Pre-Authorization on a credit card, so that if you come in and start drinking and stagger out without paying, they can still get paid for what you drank. So they pre-auth the card for $100, if you only drink $25 worth, then they charge the $25, and the $100(oops, meant $75) hold is released. But that hold, while the MERCHANT releases it immediately, it has to work its way through the processor to show up as available on your account again. They take the money immediately, but some processors can take up to a week to make the funds available again after the merchant has released the hold.

    That is not the fault of the merchant. It’s bad that the processor will take the money instantly, but take a long time to return it.

  • Katt

    No, the two that I mentioned were not prepaid. I do book through Hotels.com quite a bit and still find the holds to be just random amounts. And, those are prepaid usually.

  • Katt

    I stay in Vegas quite a bit and they are actually the highest hold I encounter.

  • Katt

    That is very true, but I stay in Vegas quite a bit and the Nugget is the highest hold amount I have encountered. I stay everywhere from a motel to a high end hotel and they are the highest I have seen.

  • jet2x2

    Please see the amounts for authorizations that I was charged. In the first example the numbers make no sense (at least to me) and the hotel could not or would not explain how they were calculated. Frankly it appeared to be credit card fraud at first. In the second example they took $1300 at check-in and I can’t even come close to that with 2 nights plus a reasonable portion for incidentals. I suspect there is no standard for this and hotels do what they want (or what corporate tells them) to do.

  • TMMao

    The first example looks like the PMS attempting to predict your daily room charges to match the total bill at check-out. If the total of the authorizations was close to the final charges, that would confirm it.

    The second example appears to be the front desk clerk overriding the auto calculation and entering in a different amount. Why they entered $1300 is a mystery, perhaps a fat finger error?

  • Sandra

    The credit card company or bank’s lack of communication and transparency with their customers is to blame for most of the angst directed at the merchant who oftentimes are no longer involved in the transaction.

    Furthermore, the credit card processor determines the hold amount depending on the industry. Our processor requires hotels to take an authorization for the room & tax for the entire stay plus 15% for incidentals which they add automatically. We disclose this in our confirmation letters, on our sign-in sheets and verbally when swiping the card.

    We recommend that if using a debit or travel card, that the guest pay when they check in as holds take longer to release.

    All of our transactions, as with most businesses these days, are processed online and immediately and all holds are released by us on the day of checkout automatically.

    The customer’s credit card company or bank — not the merchant — determines how long it takes to release a hold or to process a refund which can be up to 30 days depending on THEIR policies and the type of card used.

    It has been my experience that banks and credit card companies rarely tell the complaining customer the truth — that they have the customer’s money and it is their policies preventing the release,

  • jet2x2

    Thanks! I didn’t bother asking the second hotel about it, the charge fell off after a few days and it didn’t impact me. I just think it’s strange.

  • Nancy Nally

    Not everyone has access to a credit card due to their financial situation, Mark – even people with the financial ability or need (due to their work) to travel.

  • Nancy Nally

    Visa’s merchant agreement (and presumably Mastercard’s too since they are basically clones) specifically says that hold amounts cannot be calculated to include potential damages, so justifying hold amounts based on the hotel not being able to foresee if you will damage their property is moot.

  • TonyA_says

    I guess they can still hold for the other expected expenses.

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