Eli5 why do shops, hotels and so on reserve a larger amount than needed on credit cards.

Question

For example, I’m staying in a hotel, I pay for my room with MasterCard. The total comes to 250 dollar. I check my credit card statement 2 days later and there is 250 dollar off the account and an other 250 reserved.

In: 2

Answer 1

Think of it like a security deposit. They put a hold for extra money on the card so that in the case they need to charge your card for damages, (1) they *know* that they can, and that you didn’t just use a prepaid card with just enough to pay for the room, but (2) By having that hold, they can still get their money even if you cancel the card.