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Beware the 'Hold' on Your Credit Card

You may be closer to your credit card's limit than you think -- because of charges you didn't even incur.

Some merchants charge a deposit on your card and can be slow to remove it. And that could spell trouble if your card balance is approaching a credit limit.

I was reminded of this fact in a rather unpleasant manner a few weeks ago, when my American Express (AXP - Get Report) card was rejected at a restaurant because of holds that remained from a recent hotel stay.

A hold, or block, occurs when the hotel, rental-car agency or other company contacts your card issuer to give an estimated total of the charges. If the transaction is approved, your available credit is reduced by this amount. Once you pay your bill, the final charge should replace the block within a day or two.

Here's what happened: I stayed at a Sheraton hotel in Baltimore and paid for my room, plus that of a colleague, with my Starwood (HOT - Get Report) Preferred Guest AmEx. The hotel added holds for each of the rooms, which were still on my card a full four days after I checked out.

Sheyna Bonnity, a customer-service representative at AmEx, told me the holds were for $836, $650, $627 and $50 -- and that the $650 and $627 holds were still on there the Saturday night after Tuesday checkout. That's $1,277 of holds left on a card with a not-so-high $2,300 limit. It is no wonder I exceeded the credit limit.

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