When you present a credit or debit card for authorization at a hotel, the automated system obtains the estimated departure amount and your bank ‘holds’ this amount awaiting a matching charge. This prevents you from overspending your limit (if you are too close to it) and allows your bank to manage your balance more accurately. Frequently, guests decide to pay by cash or another credit card upon check-out and are shocked when they check their automated systems within hours or days and they see what appears to be a ‘charge’ for the hotel stay even though they paid cash. This is not a charge, it is YOUR bank reserving the amount obtained in the authorization process and ‘saving’ it for the hotel. After anywhere from 7-14 days, this ‘charge’ will disappear and your credit limit increases by the amount originally ‘held’. Yes, if you are close to your limit, you will probably not be able to use that card until the bank removes the hold on that amount. If you are not close to your limit, it will not matter.
The same thing happens when you rent a car. Even if the estimated charge is only $110.00 for a 2 day rental, almost ALL car rental companies obtain a hold of up to $500 (in casing you decide to keep the car for a week or damage it.) Again, this comes out of your credit limit but is NOT a charge made by the rental company. Neither they nor hotels can ‘reverse’ the hold – it is a function of your bank and up to the bank to return that amount to your credit line. Many bank employees will not tell you this and they tell you to contact the business that obtained the hold to reverse it. Again though, the hotel never charged the amount to start with, so there is nothing they can return to your credit limit. Perhaps some day it will be possible for hotels to release hold authorizations and maybe even now it is possible on more sophisticated systems that I am unaware of. In this day and age of technology, I would be surprised if it wasn’t already possible but there are still too many small or cheap hotels and motels that cannot afford the sophisticated systems so this inconvenience may be here in some form for years.The best way to avoid this is only present the card you are sure you will use upon check out. Or have sufficient credit available that it doesn’t matter whether there is a hold or not. Be especially careful about using debit cards too, as this will come out of available cash for 7-14 days. Car rental companies generally require a credit card because they do not want to hold up to $500 from a checking account.
Keep in mind that sometimes you pay a credit card bill upon departure for a vacation and try to use the card within days only to have the bank deny the authorization because your payment has not been credited and the authorization would put you over the limit. It is frustrating to know you can’t use the money in the bank OR the credit card too because of the in-transit payment, so it pays in these cases to have MORE than one credit source or to just pay cash up front and be done with it.