The winter holidays are a time for families to come together. Except sometimes, it can seem like those families have to gather from the four corners of the globe. Other families travel to vacation destinations for the winter holidays, but in both cases, it's likely you're paying for your own accommodations. Not everyone and their second cousin can fit on the basement pull-out couch.
When it comes to paying for your hotel, there are two options: You're not likely to use cash, so it's either a credit card or a debit card. For many consumers, the choice may not even seem like one at all, either would do just as well as the other, right?
Wrong. Not knowing it's often better to use a credit card for hotel charges can land you in financial peril, but easily avoided peril at that.
Where the Difference Lies
The very faint line separating the viability of a credit card compared to a debit card in paying for accommodations lies in how the hotel authorizes the payments. It's a subtle differentiator that even a New Jersey Comfort Inn acknowledged as flying below the radar of the usual customer. To start, a hotel authorizes a payment because of the way rooms are reserved, and because of the considered large fees. When using a debit card, the hotel will authorize the guarantee of payment by checking to see you have sufficient available funds. Money equal to the hotel fee attached to your debit card funds will then be set off as a guaranteed payment for the hotel room. Your actual money is essentially frozen and reserved.
This is worrisome because, as the Comfort Inn Middletown-Red Bank noted, overdraft charges are more likely to be incurred when you're not aware a portion of funds you were depending on is actually cordoned off for future use. the duration of frozen assets is often standard and nonnegotiable, even if you have to cancel, further hamstringing your finances.
When a hotel authorizes payment with a credit card, it's not checking on your own money, but your credit availability. A temporary authorization is placed on your credit, according to Time magazine, nothing nearly as rigid and fixed as the guarantee of payment with debit cards.
Why Revolving Credit is Beneficial
The reason credit cards are better than debit cards in paying for hotel fees is because credit cards are revolving credit. When you know you'll be paying for a hotel room and any services, which can all total a large commitment, it's vital to maintain flexibility in your finances.
Revolving credit, unlike installment credit, is arranged to allow for fluid cash flow needs, often month to month instead of having predetermined starts and stops. In the hotel case, revolving credit works to preserve your ability to spend, which is crucial at the holiday time. Debit card use only hampers your financial maneuverability.
It's no wonder then that the Comfort Inn actually advises customers to avoid using a debit card for payment at all reasonable costs.