Can a Hotel Put a Hold on a Maxed Out Credit Card?

A common question many travelers have is whether a hotel can place a hold or authorization on a maxed-out or over-limit credit card.

The short answer is yes, hotels can and often do put holds on over-limit cards.

How Credit Card Holds Work at Hotels

When you check into a hotel, they will ask for a credit card on file and will place a hold for the estimated cost of the room and taxes for the duration of your stay.

This hold is not an actual charge, but rather an authorization request to verify your card is valid and has enough available credit to cover the anticipated charges.

The hold amount will be set aside by your credit card company, which lowers your available credit by that amount. When you check out, the actual charge is processed and the hold is removed, freeing up the authorized amount.

Hotels Can Place Holds on Maxed Out Cards

If your credit card is already at its credit limit or over-limit, the hotel can still authorize a hold amount.

This is because it is not an actual charge, just an authorization request. If approved, your available credit will show as negative or exceed your limit by the hold amount.

Hotels do not know your current credit limit or available balance when they request an authorization.

They only verify that the card is valid and active through the credit card processor. As long as the card is in good standing, the hold will be approved.

Why Hotels Put Holds on Maxed Out Cards

Hotels place holds on over-limit cards to protect themselves in case guests incur charges during their stay, such as room service, parking fees, mini-bar purchases, etc.

If they did not verify funds were available, they run the risk of guests racking up charges that exceed their credit limit.

By putting a hold that matches the length of stay and room rate, hotels ensure your card will cover the room charges and taxes during your visit. This gives them peace of mind when accepting over-limit cards.

Potential Issues with Holds on Maxed-Out Cards

While hotels can place holds on maxed out cards, there are some potential drawbacks:

• Credit card denial – While unlikely, the processor could decline the authorization request if well over your limit. This may lead to the hotel refusing to check you in.
• Insufficient funds fees – Exceeding your credit limit can trigger over-limit fees from your card issuer. The hold amount could put you over.
• Higher utilization – The hold counts toward your credit utilization ratio, even though it’s not a charge. This can negatively impact your credit scores.
• Limited available credit – Your remaining available credit will be lowered by the hold amount, which could limit your spending ability during the hotel stay.

Tips for Using a Maxed Out Card at Hotels

If you need to use a maxed out credit card at a hotel, here are some tips:

• Call your issuer first and ask for a one-time credit limit increase to accommodate the hold amount. Approval is likely if you have a good payment history.
• Book a room with free cancellation in case the hold is declined at check-in. You won’t be charged if you then cancel the reservation.
• Ask the hotel about using a debit card instead as holds may work differently. Some debit holds are only $1.
• Pay cash for your stay to avoid a credit hold. Know the hotel’s policies as some still require a credit card on file.
• Consider paying your balance down below the limit before traveling to free up available credit for the hotel hold.
• Monitor your credit card account closely during and after your stay so you can address any over-limit fees or issues quickly.

While not ideal, many travelers successfully use maxed out cards at hotels.

Understanding how credit holds work and taking a proactive approach can minimize hassles. Open communication with the hotel and your credit card issuer goes a long way as well.

Conclusion

Hotels are within their rights to place credit holds on over-limit cards to protect themselves.

As long as the card is still active and in good standing, the hold will generally be approved by the credit card processor. However, this can cause utilization and fee issues. Being aware and planning ahead helps make the process smoother.