Personal Finance

If you book a flight with a debit card, you might want to consider giving the hotel a credit card upon arrival - here's why

John Seetoo

Published: January 16, 2025 10:21 am

24/7 Wall Street Key Points

• The policies of hotel stays make credit cards preferable to use over debit cards, due to incidental services and other charges that incur during a guest’s stay.
• Hotels will routinely charge pre-authorization fees on cars to protect against potential damages, use, abuse, or loss in advance and hold funds until several days or longer before issuing refund or balance differentials.
• The credit card industry encourages advanced charges in the hospitality industry and issues points and other perks for credit cards that are unavailable for debit cards.
• The right travel credit card can take you to places you’ve never dreamed of. Click here now to see our top picks. ^(Sponsor)

Paying With Plastic

Due to the computerization of system operations in the travel industry, recent statistics indicate that less than 1% of airline ticket and hotel reservation bookings are conducted with cash. The convenience of plastic has proliferated for a wide range of reasons, such as:

• People are prone to spend more and keep less track of their spending habits with plastic than with cash, which needs to be replenished when the allocation in hand runs out.
• The computerization of billing, digital payment, inventory management, and customer demographic information is all tied to information gleaned from credit and debit cards that would otherwise be anonymous if conducted with cash.
• Apart from bars and restaurants, the preponderance of digital or credit card payments means minimization of employee cash handling. This mitigates theft, counting errors, and potential physical robberies. 
• Airplane flights and hotel records conducted with credit cards create the paper trail often used by law enforcement and homeland security to track criminal and terrorist related activities during investigations.

While ID theft and credit card fraud have snowballed due to the ubiquity of plastic and digital payments, the vast majority of transactions are legitimate, and their use has greatly accelerated the speed and growth of retail and corporate level product or service transactions.

Hotel California – $ Imitating Art?

Don Henley sang Eagles’ classic song, “Hotel California” , which could easily reference the way the hotel industry builds up pre-authorized charges on guests’ credit cards.In the popular hit Eagles song, “Hotel California”, Don Henley’s last cryptic lytic line is, 

You can check out any time you like,

But you can never leave.

While he may have been alluding to the Southern California party lifestyle, it could also very well apply to one’s credit card charges in the hotel industry.

A Reddit poster recently inquired about the pros and cons of using credit cards vs. debit cards when making reservations for a flight and hotel with a virtual debit card. He asked if he should present a credit card upon check-in, or if it was ok to proceed with the virtual card.

The standard hotel practice is to only charge for the room upon check in, unless there is a notice policy stating that charges incur if cancellations are not received within 24-48 hours before check in date and time. 

The majority of respondents advised using a credit card, unless the debit card had a sizable balance on it and a physical version. The hotel will usually run a test charge, so they need to have a physical card of record, which will often have a pre-authorized amount that will freeze access to those funds for the duration of a guest’s stay.  However there are a number of other advantages that favor the use of credit cards over debit cards at hotels.

The Credit Card Edge

While debit cards can be used similarly to credit cards in practically all financial transactions, the hospitality industry favors credit card use and offers both practical and financial incentives for doing so.

• The Credit Card industry is fueled by transactional volumes. To stimulate use, travel points and other perks are earned on credit cards that are unavailable with debit cards.
• A credit card is more likely to hold a greater reserve for additional charges vs. a debit card, which only holds a fixed amount balance until replaced. 
• Pre-authorization charge overages will usually be reimbursed to a credit card within a week. Those same charges may take as long as 30 days to be reimbursed to a debit card.
• Credit cards offer greater customer protections,  such as fraud protection, and dispute arbitration that are unavailable with debit cards.
• Some hotels may refuse to accept debit cards, as some computer systems cannot do authorizations on them, unless the debit card is issued by Visa or MasterCard.

Overall, the perks and precedence of credit cards in the hospitality industry appears to outweigh any arguments for the use of debit cards. While using a debit card may aid in keeping within a stricter budget, it will offer significantly reduced spending flexibility, unless the card maintains a high enough balance for the duration of one’s hotel stay.