Originally Posted by
carrotjuice
When a merchant (eg. hotel) takes a "hold" they essentially push through a transaction say for £1,000 and receive an authorization code. But they haven't settled the transaction yet.
Subsequently when the final bill is tallied at say £800, a conscientious merchant would retrieve the original authorization code and settle £800 against it. £200 of the withheld credit limit is effectively released back.
But some merchants, out of unfamiliarity (or at times laziness to retrieve the original code), end up pushing through the £800 final charge as a separate transaction (thus getting a new authorization code). So effectively your credit limit is being earmarked twice, first by the £1,000 hold and additionally by the £800 charge.
But if nothing is settled against the original £1,000 hold within a stipulated timeframe (can be up to 14 days, based on whatever was preagreed between the merchant and its card acquiring bank), the hold automatically "drops off" and replenishes the credit limit.
Likewise should the final charge be larger than the original hold, say £1,500 - a conscientious merchant would push a £1,000 charge against the original authorization code (as that was the original authorized limit), and initiate a separate additional charge of £500. But sometimes a merchant would simply push through a separate £1,500 charge, which is incorrect. But the effect is the same - a larger than necessary earmarking of the cardholder's credit limit.
Some years have now passed since I was involved in card risk assessment but it looks like merchants still have little idea what they are supposed to do with pre-authorisations, The hotels seemed not to care what they did and then it was too late. Once a new transaction was done, rather than key in an offline transaction with the previously given code, there was no undoing it. Card holders on holiday were spending much more than usual and ended up with no availability for the very reason CarrotJuice mentioned. I think the technical term is that they were *stuffed* and often the funds didn't become available until they got home.