Hotel hold or pre-authorisation

[bamboo tree]

Generally when I've travelled recently, I've used a debit card that doesn't have foreign transaction fees for my expenses. This includes when I'm asked by a hotel to provide a card when checking-in (I thought this was just to cover incidentals, but have been told by others that they actually put a hold on the card for the amount of your room charges?).

Anyway, this got me interested in what everyone's strategy/experience is with being asked to provide a card upon checking-in to a hotel. I now have a foreign transaction fee free credit card, but with a fairly low limit. So I'm a little unsure whether to use this as well and risk locking up a lot of my credit limit.

I was thinking of just putting a small amount of money linked to the FX fee free debit card and then using my credit card for purchases.

 

[RooFlyer]

As as rule, paying Hotel pre-authorisations by debit card is a bad idea. If it all comes back, it’ll take a while and it’s your money. If you use a credit card and it takes a while then it’s other peoples money.

As you identified, the downside is you lock up a bit of your credit limit. It will be a personal decision of which is the greater downside - tying up your own money or tying up part of your credit limit.

Sometimes hotels will take something like $100 for incidentals, other times the pre-authorisation is to cover the full amount or at least the first night. I always ask them to take any final charges out of the pre-authorisation but some of them just refuse to do this, so then I’ve got two foreign transactions but as long as you’ve got a fee free card that’s not a big thing.

 

[RealtimeY]

I usually give them any credit card for the authorisation, and ask to settle with my fee-free debit card at check-out and cancel the hold. Often they won't accept a debit card at all.

As said above though, I would always prefer for funds on credit to be locked before funds in my own bank account.

 

[bamboo tree]

I generally just transfer relatively small amounts of money to the account linked to the debit card (and replenish as the funds are spent), but haven't noticed the effect of any holds in terms of purchases being declined.

Maybe I was just lucky that the hotel in question only put a hold on for incidentals as opposed to for the total room charges.

 

[I love to travel]

A few things. Some hotels, especially in Asia don't let you use debit cards.

As someone who had a credit card hacked whilst overseas, was grateful that I could spread the load of pre authorisations between my one remaining credit card and some debit cards. Did reflect though it would have been much more stressful if on a tight budget.

One other thing to think about is that managing debit cards with small balances reduces risk of hacking. Much harder to do on large limit credit cards.

 

[burmans]

A few things. Some hotels, especially in Asia don't let you use debit cards.

As someone who had a credit card hacked whilst overseas, was grateful that I could spread the load of pre authorisations between my one remaining credit card and some debit cards. Did reflect though it would have been much more stressful if on a tight budget.

One other thing to think about is that managing debit cards with small balances reduces risk of hacking. Much harder to do on large limit credit cards.

Not sure about this, depends on the CC but I can put limits on transaction amounts, turn overseas usage on/off (so only turn on as and when I want to make a transaction), get SMS on all transactions, turn online payments off etc. Plenty of options to control usage though it does take some work.

Have to say I’ve never been a fan of huge CC limits though for many reasons, not least they restrict somewhat your ability to apply for/churn more CC apps.

 

[MEL_Traveller]

Generally when I've travelled recently, I've used a debit card that doesn't have foreign transaction fees for my expenses. This includes when I'm asked by a hotel to provide a card when checking-in (I thought this was just to cover incidentals, but have been told by others that they actually put a hold on the card for the amount of your room charges?).

Anyway, this got me interested in what everyone's strategy/experience is with being asked to provide a card upon checking-in to a hotel. I now have a foreign transaction fee free credit card, but with a fairly low limit. So I'm a little unsure whether to use this as well and risk locking up a lot of my credit limit.

I was thinking of just putting a small amount of money linked to the FX fee free debit card and then using my credit card for purchases.

As long as you aren’t intending on doing anything that would require the hotel to invoke its hold, it won’t really matter if you use a fee free card or not. The amount might be ‘pending’, but it will never be activated. So you’ll lose no coversion fees.

Just pay with your fee free card on checkout for anything you have to,

Post automatically merged: Aug 1, 2024

As as rule, paying Hotel pre-authorisations by debit card is a bad idea. If it all comes back, it’ll take a while and it’s your money. If you use a credit card and it takes a while then it’s other peoples money.

As you identified, the downside is you lock up a bit of your credit limit. It will be a personal decision of which is the greater downside - tying up your own money or tying up part of your credit limit.

Sometimes hotels will take something like $100 for incidentals, other times the pre-authorisation is to cover the full amount or at least the first night. I always ask them to take any final charges out of the pre-authorisation but some of them just refuse to do this, so then I’ve got two foreign transactions but as long as you’ve got a fee free card that’s not a big thing.

Normally, for the pending or authorisation to drop off the credit card it has to be like for like. If you use part of the authorisation, not sure how it gets reconciled?

Better just to pay incidentals separately, and the like-for-like authorisation just drops off?

 

[oz_mark]

I've found debit card authorisations seem to take longer to fall off the credit card authorisations.
I typically use credit cards, but that is more as it's not really my money getting blocked, but maybe that's because if you're on the move a bit the blocks could add up to a bit, and my credit card is more able to deal with it

 

[RooFlyer]

Normally, for the pending or authorisation to drop off the credit card it has to be like for like. If you use part of the authorisation, not sure how it gets reconciled?

Better just to pay incidentals separately, and the like-for-like authorisation just drops off?

Not sure I fully understand what you are saying, but what has happened to me is, say there is a $100 pre-auth and I have breakfast. At check-out they deduct the breakfast from the $100 and the balance gets returned to card (eventually). I don't always check that it does come back, but those time I have, it had. Maybe its the way the pre-auth is handled? I don't know.

My theory on doing it this way is that I have less credit tied up awaiting return. But if you think its flawed, and subject to problems, I may reconsider.

 

[MEL_Traveller]

Not sure I fully understand what you are saying, but what has happened to me is, say there is a $100 pre-auth and I have breakfast. At check-out they deduct the breakfast from the $100 and the balance gets returned to card (eventually). I don't always check that it does come back, but those time I have, it had.

My theory on doing it this way is that I have less credit tied up awaiting return. But if you think its flawed, and subject to problems, I may reconsider.

I think it just comes down to keeping it simple. On checkout the hotel should reverse the pre-authorisation. If that’s $100, they just cancel it. Like for like.

If you want them to only reverse a part of the pre-authorisation it can cause a mismatch, and might not go through or be recognised by the bank.

 

[Quickstatus]

On checkout the hotel should reverse the pre-authorisation

Maybe its the way the pre-auth is handled? I don't know.

I have heard that the Pre-Auth does not necessarily get removed immediately on full payment at checkout. A Pre-Auth can be removed or run out until it expires - this can be a few days or longer depending on Merchant agreements with the Payment Processor. Ive heard 5-7 days from Pre-Auth to expiry unless acted upon earlier.
A hotel transaction is not finalised at checkout...They will do a room check, inventory the mini bar, make sure there is no damage or pilfering of monogrammed robe/slippers.
A Pre-Auth removal either actively or via expiry immediately reinstates the available balance which is much better than a CC refund.


A Pre-Auth does not remove money from the presenting card's account. it is merely a block by the issuing bank on the amount that can be spent. Basically the issuing bank just reduces the available balance at a Pre-Auth request and reinstates the available balance with the Pre-Auth is removed or expires. As no money changes hands, pre-Auth does not incur transaction fees, currency conversion fees, and the hotel is not beneficially holding on to your $.

I can imagine that some Hotels might require a Pre-payment which is then different to a Pre-Authorisation.

 

[MEL_Traveller]

I have heard that the Pre-Auth does not necessarily get removed immediately on full payment at checkout. Some hotels might hang on to the Pre-Auth until a room check occurs and then let it expire - this can be a few days or longer depending on Merchant agreements with the Payment Processor.
Remember: a hotel transaction is not finalised at checkout...They will do a room check, inventory the mini bar, make sure there is no damage or pilfering of monogrammed robe/slippers.

Agree. But the hotel *should* process a reversal on check-out, if they have done a room check and are satisfied everything is ok! Back in ye olde days when you sometimes had to leave a cash deposit at check-in, they gave that back on check out!

 

[Quickstatus]

But the hotel *should* process a reversal on check-out,

Agree - once the room check is done. However, it comes down to the financial control systems at the hotel. I suspect it all goes into a "to do" in-box which someone has to then manually process at some stage. Or they can (lazily) eliminate all the work by just letting it expire.

......

One current problem with Pre-Auth is Electric Car charging.
Some EV charging providers - (looking at you AmpCharge (Ampol)), have a Pre-Auth amount set at $30 per session
The problem is that the charging handshake between car and charger is sometimes unreliable requiring HUACA (hang up and charge again) because the charging does not initiate. Each time the charge plug is plugged in there is a Pre-Auth and the Pre-Auth is not immediately removed on removal of charge plug and payment if any. The system lets it expire after a day or so. Ive heard some people needing to HUACA several times incurring multiple Pre-Auths. In one case completely reducing available balance to zero. .

 

[RooFlyer]

I have heard that the Pre-Auth does not necessarily get removed immediately on full payment at checkout. A Pre-Auth can be removed or run out until it expires - this can be a few days or longer depending on Merchant agreements with the Payment Processor. Ive heard 5-7 days from Pre-Auth to expiry unless acted upon earlier.
A hotel transaction is not finalised at checkout...They will do a room check, inventory the mini bar, make sure there is no damage or pilfering of monogrammed robe/slippers.
A Pre-Auth removal either actively or via expiry immediately reinstates the available balance which is much better than a CC refund.

A pre-auth can take up to, and sometimes more than 2 weeks. That, with various CC cards in my travelling memory.

But other than that, I think the other stuff is pretty well known.

A Pre-Auth does not remove money from the presenting card's account. it is merely a block by the issuing bank on the amount that can be spent. Basically the issuing bank just reduces the available balance at a Pre-Auth request and reinstates the available balance with the Pre-Auth is removed or expires. As no money changes hands, pre-Auth does not incur transaction fees, currency conversion fees, and the hotel is not beneficially holding on to your $.

Again, pretty well known, but I had at least one time, and I think more than one, where a FX charge was made and I successfully got that reversed after I got home. There are many combinations of cards, hotels and transaction mechanisms out there.

 

[Cynicor]

I use my Amex for pre-auths, knowing I won’t use it to pay the bill or other transactions due to its foreign exchange fee.
Then when paying the bill i have them remove the pre-auth and pay my bill on my card with no exchange fee.
This means I’m only tying up limit on my useless card, and both my credit card and debit cards are free to be used elsewhere.

 

[I love to travel]

4 hotels in Asia over the last week none have accepted debit cards at check in

 

[bamboo tree]

I use my Amex for pre-auths, knowing I won’t use it to pay the bill or other transactions due to its foreign exchange fee.
Then when paying the bill i have them remove the pre-auth and pay my bill on my card with no exchange fee.
This means I’m only tying up limit on my useless card, and both my credit card and debit cards are free to be used elsewhere.

Thanks for this. Is this something you have to tell them at the start (that you want to pay the bill with a different card later)? Or will you generally get the choice upon check-out?

 

[RealtimeY]

At check in they usually tell you if it's a hold or otherwise, but it wouldn't hurt to clarify your intentions with them anyway.

At check out, in my experience, they usually offer to take it from the authorisation, and you need to tell them otherwise.

 

[Cynicor]

Yeah, definitely worth telling them at both points, but I rarely have issues with it