Swipe that debit card carefully: Hotel holds can tie up your money

— -- Think carefully before handing over a debit card at a hotel front desk.

After saving for a San Francisco vacation, Manhattanite Lauren Hopkins checked into the Oakland Marriott City Center in August and was asked for a card to cover incidentals she might incur, such as meals, Internet connection or minibar snacks.

Hopkins, 23, who doesn't use a credit card to avoid overspending, thought she had more than $600 in her account until her debit card was refused at a restaurant that night. It was over the limit, she says, because the hotel mistakenly billed her again for two nights' lodging even though she had prepaid for the room through an online travel agency, plus held another $300 for possible incidentals without her knowledge. Because her card is tied to her checking account, she was broke.

And consider the experience of Scott Huelskamp, editor of a trade publication for rehabilitation professionals. He checked into The Red Rock Casino Resort Spa outside Las Vegas for a conference and was asked for a card to cover what he calls "the dreaded incidentals" he wasn't going to use. He pulled out a debit card and later discovered that the hotel was holding $150 for each of the two nights he was there.

Back home in Wayne, Pa., his wife tried to use their account, leading to overdraft fees. Although the $300 was credited back, it took a few days.

It was "just like I spent it," he says. "You feel helpless."

Though hotels routinely put a hold on a card for room rate and tax when a reservation is made to protect themselves from those without money to pay and to avoid losing revenue for no-shows, "there is no standard industry practice" for guaranteeing incidental payments, says lawyer Banks Brown, general counsel for the American Hotel & Lodging Association.

Some hotels place no holds on guests' cards for incidentals; others might hold $50 a day or more. "The practice makes sense because (hotels) know from statistical data how much people tend to spend on incidentals and want to ensure they are paid," Brown says.

Problems were created when debit cards became more popular, he says.

Consumers need to understand that a hold on a credit or debit card when you arrive "is for much more than you think your bill will be when you check out," says Ed Mierzwinski, consumer program director for the U.S. Public Interest Research Group. "Most people aren't totally maxed out on their credit cards, so they don't notice a hold. But people are closer to zero in their banking account" and don't realize they can lose access to money they haven't actually spent.

Releasing holds can take some time, Brown says. First, a hotel accounting department must release a hold; then a bank in the card-processing chain must remove it. "Hotels are unable to release (funds) themselves" and can't control the timing, he says.

Some lodgings won't take debit cards because of potential problems.

"We have a sign on our counter that tells what's required, and we do not recommend using a debit card," says Jeanne Hizon, sales manager at the Executive Hotel Vintage Court in San Francisco. "Debit cards can be a Visa or a MasterCard, (sometimes) you can't tell … It's sad, but a lot of hotels fail to tell guests" that money will be frozen in their debit account.

That happened to Mia Gannon, advertising and promotions coordinator of the Philadelphia Museum of Art. After returning home from a conference in Miami, she saw unfamiliar pending charges from Hyatt Hotels on her Visa account. "I worried about possible identity fraud or theft at the hotel," she wrote to the hotel's general manager.

When a hotel staffer told her the holds would clear, she felt relieved and bought lunch at her museum's cafeteria. The card was declined, and "it was humiliating," Gannon says. A week later, the holds still were in place, she says. "The banks blame the hotel and the hotel blames the bank."

Says Erica Harvill, a spokeswoman for MasterCard Worldwide, which offers both credit and debit cards: "We don't put any rules or regulations on how long a hold will be in a place. We recommend that cardholders check with the bank that issued the card" when dealing with hotel holds.

Road warrior Jon Feiwell of Houston, who travels about one-third of the year, has another suggestion: Bring a few hundred in cash. "I used to travel with a debit card or a credit card with a low limit. It was a constant process of calling the bank and trying to get unused authorizations removed."

As for Hopkins, who works in administration at a New York law firm, she spent hours wrangling with the hotel.

"The person at the front desk gave me $100 in cash but said she couldn't get the money put back in my account because it was a weekend," Hopkins says. It took about a week to get her money back.

In the end, the hotel refunded the amount of her stay. But "it was so annoying," she says. "I had spent so much on this trip — and I really didn't enjoy it."