A new problem with using credit cards for hotel check-ins has been highlighted in recent weeks. There is a chance that you could go over your credit limit without knowing - simply because you checked in at a hotel.
It is a common practice at hotels, but many people do not even realise what is happening to their credit card at check-in. When your card is initially swiped, what is really happening is that a sum is reserved from your account to cover not only the full cost of your stay but an estimate of any extras. So, for example, supposing you are agreeing to stay in a hotel room for £100 a night, it is not uncommon for the hotel to reserve almost double that price on your account in order to make sure you have enough funds for extras such as meals, in-room movies, and so on. This earmarked total sum is unavailable for your use during your stay and the earmark is only lifted when you finally check out and your hotel processes your final bill.
This process of earmarking in itself seems very dubious as it seems to be another way of claiming a deposit, often without the customer knowing. It could also run you into serious credit troubles.
Picture this scenario: a customer might check in to one hotel, where their credit card will be swiped and the funds earmarked. Before ever incurring a charge the customer cancels the booking and checks in to another hotel where the credit card is once again swiped. The card fails because there is not enough credit left as each hotel had pre-authorised a certain sum to cover an estimated cost of the stay, each sum being earmarked and therefore reducing the available credit.
Even though the process of hotel pre-authorisation is in much dispute, APACS, the body that regulates credit cards, confirmed that it was a standard practice, with hotels often pre-authorising an unrealistic amount before the stay. This is usually not an issue after check-out has occurred, but of course it can seriously disable your finances before check-out and therefore can be a serious problem. Not only are the pre-authorisation charges often unreasonable but the customer is not informed that this is happening.
Sandra Quinn of APACS insists that hotel customers should stay aware of what is happening to their accounts. It is important for everyone to make sure that they are asked to sign or authorise an amount before any sum on the account is earmarked.
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