By John Campbell

If you use a credit or debit card to make reservations, preorder merchandise online or even start a tab at a bar, a hold may be placed on the card to cover the estimated costs of the transaction. This “blocks” the funds from being used until the final bill is charged to your card.

By blocking the estimated funds needed to cover the final bill, businesses ensure that they’ll be paid before a customer makes use of various goods or services. Many of these businesses won’t bother to tell you they’re going to block your card, which can cause you a number of short-term financial problems you never anticipated. For starters, the estimated final charge may be much higher than the actual bill. Use your debit card to get $10 in gas without entering your personal identification number (PIN) and you could end up with a $50 block on your attached bank account. If your debit card is blocked you could end up with a very low bank account balance or even overdraw your account. If your credit card is blocked and it’s near its credit limit, you could be slapped with hefty over-the-limit fees if the card isn’t declined outright. This could also lead to a higher interest rate on your card.

Making matters worse, if the card being blocked isn’t used to make the final payment, the block could stay in place anywhere between 10 - 15 days. This period of time is a grace period credit card companies and banks use as they wait for a final charge to be applied to the blocked balance. Once the grace period ends without a final charge being applied, the blocked balance is taken off a credit card or transferred back into a debit card’s attached bank account.

You need to be aware of any blocking policies for each of your credit and debit card accounts. When in doubt read your cards’ terms and conditions. Most cards should have clearly defined rules and regulations considering how much of a balance can be blocked and when blocking is allowed to occur. Some cards may not allow blocking at any time.

If the card you want to use is blockable, you should ask businesses you make reservations with or preorder merchandise from if they’ll be blocking an estimated balance. If so, find out exactly how much will be blocked from your card before agreeing to let it be blocked. This could save you a lot of hassle in the short-term, especially if you’re low on funds or available credit. If you do agree to have a card blocked but use another form of payment for the final bill, request that the blocked balance be removed from the card or you’ll be stuck waiting up to two weeks for the credit or funds to free up. If a block doesn’t get removed from your card in a timely fashion or if the final balance has already been posted, a call to your card’s customer service line may be all it takes to get the block removed.

The more you know about your credit and debit card accounts and what charges can be blocked, the better off you’ll be.

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John Campbell is the writer and editor of CashBuzz, A financial portal for the rest of us. Check out cashbuzz.com for the latest articles on money management and tips and tricks that can help improve your finances. This article may be reprinted on your Web site if the copyright, author information and active link are included.