Landlord is offering security deposit hold on credit card

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Landlord is offering security deposit hold on credit card

Postby shoptalk01 » Sat Aug 18, 2012 12:45 pm

How does this work? I found an apartment and they said they would acept a valid Credit Card to have on file in lieu of a cash deposit, otherwise I have to give them a $1,000 cash deposit. They said it must be a real credit card and can't be a debit or prepaid card. On the upside, they guy bought these apartments for an investment, has no clue how they should be run and he's willing to rent without a lease or credit check providing I give him a valid number to keep on file. He said the CC would be charged in the event of a late payment or if there was damages to the room.

Would this put a "hold" on the card for 6 months to a year or however long I was there? Would he know if I give him a card with a $200 limit? I don't want to ask him because $200 won't cover a missed rent payment so I doubt if he would accept it. My mom said I could use her card, but how do I know he won't ring up a bill of $10,000 and leave us on the hook for the CC bill?

I know a place like a hotel might put a hold on your card for $150, but when you check out in a day or so, your card is charged for $75 and the hold is released. I reserved a room with a prepaid card and they said it didn't matter if it was prepaid or not as long as the transaction could be run as a credit and the funds were available at the time I check in. The only thing I haven't done with a prepaid card is rent a car, but I was told at the bank that it would work providing my card has sufficient funds and a high enough daily spent limit to cover the hold they place on the card. For example if I have $2,000 on the card, a $1,500 daily limit and they have a $1,000 hold, it should work just fine. I'm also willing to bet if I put $1,000 cash on the table I wouldn't have much problem renting a car.

So then what I don't understand is how having a CC number on file helps protect these people in case I fail to pay my rent???? How do they know the card continues to be valid? How would they know I have enough credit to begin with? I just seems I could charge a $10 pizza, yup card's vaild, then either max out or cancel the card.

Can he demand credit cards only, no debit or prepaid?

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Postby Crashem » Sat Aug 18, 2012 2:05 pm

The guy doesn't know what he is doing. He is probably trying to avoid taking a deposit and therefore be obligated in many states to follow procedure as keeping escrow account and/or paying interest on money. He could authorize "put on hold" the 1k. Authorizations will fall off in a certain time period (30 days.) unless renewed. So possible he could be renewing but I doubt it. Basically take 1k from limit while authorization is in place. Probably why he doesn't want to take debit cards as authorizations actually remove money from account. If he doesn't renew, card could easily not have money available or be cancelled etc when he did want the money. Also, there are systems in place to detect prepaid and debit cards but whether or not he has them installed is another thing. Also, he could just be essentially taking the deposit via credit card vs. cash by actually running transaction through.
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