If you are heading overseas, relying on only one credit card could land you in embarrassing situations if your bank decides it has been stolen and puts a stop on it.
The recent experience of a Holden Westpac MasterCard holder is an example. The cardholder was making a purchase at a Hong Kong store when the message "do not honour" came up on the merchant's terminal. It meant that his credit card was not accepted there or anywhere else.
At that point, the cardholder says he had used a mere 6 per cent of his credit limit, so the block had nothing to do with that.
The cardholder returned to his hotel and contacted Westpac Card Services, which told him his credit had been stopped because the bank believed it had been stolen.
The bank said it rang his home to see if it could verify that he was in Hong Kong, but nobody answered. It made no further checks and simply cut the credit line.
It was fortunate for the cardholder that he was not far from his hotel in Hong Kong at the time. A few days earlier he had been on a remote island in China, where it would have been much harder to sort out the problem.
The irate cardholder wrote to the the bank's managing director. He received a response from its customer advocacy section, saying that the bank had tried to contact him before the block went on the credit.
In most instances, the bank told him, it is successful in verifying that the card is not stolen. However, if it can't contact anyone, putting a block on the credit not only protects the bank, but also flushes out the cardholder whose credit has been stopped. They tend to call the bank at the first opportunity demanding an explanation, at which point the block is lifted.
It sounds rational enough, but does nothing to alleviate the embarrassment of having your card refused. Too bad if the block goes on your card when you happen to be checking out of your hotel to catch a plane and have no other money on you.
The cardholder mentioned above has cancelled his Westpac credit card.
One solution is to carry a spare card, to be used only for emergencies such as the above situation. Note that, as the Westpac cardholder pointed out, if his wife had been issued with a supplementary card its credit would have been blocked too.
The cardholder also complained to the ACCC about his embarrassing treatment.
The ACCC wrote back and pointed out that paragraph 13.1 in Westpac's terms and conditions said it had the power to "cancel your card at any time without prior notice".
This is no surprise. We all know that bank lawyers toil day and night to protect the bank 110 per cent and afford the customer no leeway.
The ACCC also noted that the bank was only protecting its customers, rather than engaging in misleading conduct.
With so many introductory offers available for cards from organisations such as Virgin and American Express, it is worth having a bit of insurance up your sleeve when you travel, in the form of an extra card carrying low interest, as well as a quantity of travellers' cheques, to avoid being stranded in shops with a red face.
