Hotel charges: Using debit cards for incidentals can freeze your money

Thinking of slapping down that debit card for incidental hotel charges? Maybe you should think again.

It’s a common practice for hotels to put a “hold” on whatever card you turn over to them, to cover not only those incidentals (mini bar, in room movies, etc) but to insure that you don’t bolt without settling up.

When you use a credit card, that hold — as little as $50 a night but usually more in the $100-$150 ballpark — is charged and then credited back. But of course when you use a debit card, the hold effectively freezes money in your checking account, and you cannot access it. It’s like you spent the money – and sometimes you’ll have to wait days, or as long as a week, for the hotel’s accounting office to get around to lifting that hold.

Understandably, this takes some customers by surprise: They find themselves at dinner or out shopping, they go to pay with their debit card, and they have their card rejected for “insufficient funds.” Since a lot of people keep their checking accounts on the lower end, it’s possible to find yourself flat broke thanks to a hotel tying up $300-$500 of your cash.

Hotels are increasingly requiring credit cards for their holds in an effort to avoid customers angry at not having access to their money. While it is obviously possible for a hotel hold to lead to you exceeding your credit limit, most people’s credit card limits are considerably higher than their checking account balances.

USA Today has an interesting article on travelers who’ve had their money frozen by hotels. The advice seems simple: Use credit cards whenever you can.