Once you've signed up for a merchant account and you don't have to wait for deposit checks to come in, you just have to come up with a game plan for handling security deposits. You basically have two options:

1.) Charge and refund. Go ahead and charge the deposit, but realize that you will also be charged by your credit card company. When you refund (credit) the deposit upon departure, you may be charged again. Double check the guidelines for your account to determine the potential fees incurred.

2.) Preauthorization of funds. This is where you "hold" the deposit amount and then release it upon departure, similar to hotels' procedure. Check with your credit card merchant account to determine if there are any applicable fees.

Please note that there may be time limits on a preauthorization. For instance, you may only be allowed to hold funds for 30 days. In this case, you should charge the renter upon booking and go with your regular payment schedule. Then a couple of weeks before their rental dates, process the preauthorization, making sure you have ample time after the guests' stay to make any necessary charges.

When determining how to accept security deposits via credit card, it is important to not only consider the charges but also your typical timeline along with possible exceptions. Extremely early pre-bookings and last minute bookings might have an affect on how you choose to process your deposits.

How do you handle accepting security deposits by credit card? "I use PayPal because it's so easy and it helps me keep track of my transaction history.  Plus, they refund the service fees if you process the security deposit refund within 60 days." --Katherine H., Taos, NM. "We use Paypal sometimes for Security Deposits. However, I would rather take a personal check if there's time for it to clear or a cashier's check. I have had 1 bad experience with the renters damaging the faucet and washer. They would've disputed the charge if I hadn't taken a check which is a big hassle from what I understand." - Teri, Seattle, WA (VRBO #110780)  "Just a warning: we had a renter give us a debit card number rather than a credit card number and when we did the pre-authorization, the renter called us upset because it froze the $300 in their bank account. I suggest getting a cc number rather than a debit card number. Also, there may not be a way to "undo" an authorization except for the renter to go to their bank and ask for it to be removed. Could be a hassle." - Erin, Loudonville, OH (VRBO, VacationRentals.com)

Sample Forms & Checklists for Vacation Rentals A list of the sample forms available on the Owner Community.   Security Deposit Guidelines for Vacation Rentals Helpful guidelines to follow for handling deposits for your rental.   The Different Types of Vacation Rental Fees Definitions of common fees included in rental agreements.   3 Steps for Resolving the Problems of Your Vacation Rental Guests How to turn a disgruntled renter into a repeat one.

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