If you’ve ever approached a rental car counter with a debit card in hand, you’ll know it can get ugly fast. But there are very good reasons why debit cards are poison for rental car companies.
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Debit Cards & Credit Cards Are Not The Same
For those who do not carry many credit cards, the difference between the Visa debit card in your wallet and a credit card may not seem different – after all, it has the Visa, Mastercard, or Discover logo on the front just like a credit card. But they are not the same. Credit cards have the ability to attach debt, more is required to sign up and maintain a credit card than a debit card account and there are recovery options available as a result.
When a card of either kind is swiped at a vendor, the amount required for the purchase is the only amount authorized unless a special hold is registered for that vendor, such as hotels or tips at restaurants. That authorization, which holds the money in the account unavailable for spending, needs to remain relative to the cost of the purchase.
When using a credit card, the act is essentially harmless unless you are at the very height of your credit line. However, with debit cards, authorized funds reserved are the cash in your checking account and you must have enough to cover the cost and the hold. Rental cars + debit cards simply do not mix well.
Nefarious Characters, Nefarious Intentions
There are bad people in the world, and while you may not be one of them, they exist and pertinent to this post – they rent cars. Some nefarious renters need a rental car but have only enough money to rent for one day, though they need the vehicle for far longer. If one presents a registered but pre-paid debit card or from an account where deep personal information was not collected, the renters really don’t have much incentive to return the car on time and in good shape.
Some rental cars are rented to conduct criminal activity. Often if a rental car reeks of marijuana, it’s not someone’s medicine in their pocket – the car has been used in illicit transactions to make the criminal less easily tracked. In many of those cases, someone other than the “entrepreneur” is the renter who is compensated a small amount for being the face of the transaction.
Some rental cars never come back and from those in the know, that’s rarely from those who have presented a credit card at checkout.
Weeding Out Potential Issues
Rental car companies are massive conglomerates, may be publicly traded and can seem inhuman. However, some locations are just franchises and an unrecovered rental can be a horrifying proposition to the franchisee. By putting some basic roadblocks in place to discourage those with poor intentions, rental car companies can protect themselves without excluding unsuspecting, honest consumers.
For National, Alamo, and Enterprise debit cards are acceptable but place a hold of $250 above the total price of the rental on the card at the time ($1000 if paid in cash.) This helps the chain to limit their exposure but most importantly, removes cash transactions.
ERAC (Enterprise Rent-A-Car companies) also require a “return” ticket to use the debit card at airport locations which can be an airline ticket, cruise ship voyage but not a bus ticket. That weeds out most potential issues without penalizing the customer base extensively. Genuine customers do have some exceptions that could make this unnecessarily painful, but most fall outside of these roadblocks.
Some rental agencies in the United States may accept other forms of payment other than a credit or debit card at the time of rental and based on the rental location. For example, specialty agencies that focus on premium cars ($100,000 retail or more) may add a credit check, proof of insurance, and even personal references above the rental charges. Please contact your specific rental agency if it seems like you have a special situation.
If a renter is under the age of 25 years, some may not rent at all or may have a substantial surcharge, please note the agency’s policy if you fit this criterion.
Recovery Options
Debit card customer holds can be collected as soon as the car rental firm can determine that they have damage exceeding the held amount or when the car isn’t likely to return. But that’s a pretty pathetic sum. Some car rental companies are self-insured (they don’t have an outside insurer to pick up the tab) which leaves them in a tough spot.
There’s a legal remedy too. After all, someone gave a driver’s license at the checkout counter and a matching debit card, so a judgment can be secured against the value of the car. But that can take a long time, cost a lot of money to prove if taken to trial and even then, it’s not a sure thing.
Credit card customers offer more recourse. The rental car companies can attempt to obtain additional funds to recover an unreturned car or unpaid damage. They may offer some help especially since most credit cards will exceed the limit temporarily against a charge.
Conclusion
There are plenty of rental car customers that use their debit cards as their primary method of payment. While using debit cards over credit cards isn’t advisable if given the choice, with some effort they can be accepted by rental car companies. Those rental car firms have a reasonable concern regarding their asset that other vendors do not and it seems reasonable to me that debit card customers should be willing to show additional safety measures to take the vehicle, likely 100 times as expensive as their rental.
What do you think? Are rental car companies right to treat debit cards with skepticism? Is there another way for rental car companies to protect themselves other than deposits and discouraging debit cards?
Live and lets fly. Do rental cars fly? You’ve done some research and wrote a paper about it. Thank you. Good for you.
Maybe tips and tricks how to rent a car with debit card would be nice, since based on your writing, rentals are reluctant to do it.
As readers we noted your valiant effort in writing this article. But breakdown of cause did not do us any favour at all. What we need is solution or tips and tricks for it.
Unless maybe you need help to make a good article from suggestions in comments sections, readers would be grateful to read that issues been solved rather than is this the issue?
What are you talking about? Maybe that wasn’t the point of the article, and I’m sure an internet search will answer your additional questions. I found Kyle’s article interesting and appreciate the info.
@James…umm…wtf? Please learn how to effectively write down what you are actually trying to convey.
Dude, its not my fault you’re lack education to simply understood what was written…
You surely intended to win today’s as*hat award for internet comments on this blog. Congrats! You win a giant sack of poop equivalent to the amount of self importance you have.
The article is interesting and well written. Unless you’re mad that someone is highlighting the shady crap that you’re pulling with car rental agencies.
Any concrete advise given? Hah! Asslicker…. Pfft…
Dollar Rentacar has changed their policies and they are working with Dave Ramsey (who hates Credit Cards). Dollar now happily accepts debit cards
Gotta fill space with something.
We were practically scammed by the rental company in the US a few years ago. The car was rented with my partner’s detail and her card read “CREDIT+DEBIT” as often is the case in Europe. If swiped, it will default to credit, if chip is used, there’s selection on the terminal, and on the back of the card is the second credit card number for the debit part. Contactless usually defaults to debit here.
The rental company clerk didn’t understand this, just kept saying that they don’t accept debit cards. He also refused to swipe the card to see it himself. I assume he didn’t even know what debit card really is.
We had pre-paid the booking so the only option was to change the driver and other details and he managed to double the total charges.
As we had already paid for it, we couldn’t just walk away. Since then I have never pre-paid for rental cars.
After the credit card crunch caused by the recession, many employed people (including 2 of my staff) lost their credit cards, or had their credit limits severely cut. They really only had a debit card as a viable option for hotels, cars, etc. So the car rental companies were forced to accept debit cards due to the reality of the financial markets and the options available to their customers.
I only carry a Debit card and Driving licence in my wallet.
I am registered with Avis as a “Preferred” customer, so they have my details and history.
Never been a problem. Usually I pre-book/buy.
Good thing is on larger airports there is a fast-track route for Preferred customers so pick-up time is minimised.
Hardly needed to break stride when in Rome recently, a blessing given the heat.
Suggest checking out and registering with a couple of companies who have loyalty programmes and allow registered customers to use Debit cards.
Say one with a good domestic coverage and another with a more international presence, that way you keep all bases covered and options open.
In my case Avis for international/backup and Enterprise for UK.