Why You Should Never Use a Debit Card to Rent a Car
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Using a debit card to pay for purchases can help keep your finances in check because your spending is limited to the money in your account. However, this form of payment isn’t the best choice for everything, including rental cars.
Some rental car companies allow you to rent a car with a debit card, but that doesn’t mean it’s a good idea. Here’s why paying for a rental car with a credit card is almost always a better option.
Debit cards are a liability for rental companies
Renting a car to a customer is always a risk. You could damage the vehicle, get a traffic violation or not return it at all. Consequently, rental car companies prefer to hedge that risk by having your credit card on file.
When you rent a car, the company pre-authorizes a security deposit on your credit or debit card. If you incur any unexpected costs during the rental period — for example, damage to the vehicle — your card will be charged accordingly. If total expenses exceed the amount of the security deposit, you’ll be liable for the overage.
It’s much easier to charge extra fees to a credit card than a debit card. If you don’t have the funds in your bank account, the company is unable to recoup the expenses. This is the reason many rental companies either don’t accept debit cards at pickup or agree to do so only if you meet additional terms and conditions.
You may need to fill out extra paperwork
For example, Enterprise does allow you to rent vehicles with a debit card from airport locations in the U.S., but you’ll need to provide ticketed proof of an outbound trip from the location where the vehicle will be returned. When renting from a non-airport location, Enterprise encourages you to contact the local branch directly. If the location accepts debit cards to secure the rental, you’ll likely be required to provide at least some additional items, such as two current utility bills, your most recent paycheck stub, proof of insurance or personal references.
You might have to agree to a credit check
When you rent with a debit card, it’s not uncommon for rental car companies to run a credit check. The company must inform you of this in advance, according to Equifax, so always read the fine print before signing a document.
If you do not meet the company’s minimum requirements, you might not be able to rent a vehicle, according to Equifax. It could be wise to inquire about the company’s minimum requirements in advance because if your credit is pulled, it might appear on your credit report as an inquiry. Every company has a different debit card policy, so don’t assume the terms and conditions you received at one will be the same as a competitor.
For example, most U.S. Avis locations accept bank debit cards with a Visa or MasterCard logo at the time of rental. However, you must be at least 25 years old and will likely need to agree to a credit check to determine your creditworthiness. Beyond that, debit cards cannot be used on vehicles in the Avis Signature Series and for select other premium vehicles.
On the other hand, Dollar does not perform a credit check if you pay with a debit card. Instead, you’ll be required to meet the company’s debit card requirements and have enough money in your bank account to cover the estimated rental fees, plus an additional $200 authorization.
Benefits of renting with a credit card
Not using a debit card to rent a car actually works to your advantage for several reasons.
The rental agency won’t take a chunk out of your checking account balance for the authorization hold. When a hold is placed on your debit card, your checking account balance is reduced by the authorization amount, making the funds unavailable to you. For example, Enterprise refunds your deposit when you return the vehicle, but it typically takes around five to 10 days for the refund to post to your account. When a hold is placed on your credit card, the money doesn’t come out of your account. A certain amount of credit will be set aside, but your actual bank account won’t be touched.
Using a credit card to pay for your rental car can also protect you from billing errors. The Fair Credit Billing Act allows you to dispute inaccurate credit card charges. In most cases, your credit card issuer will handle the dispute on your behalf, and you typically won’t be required to pay the charge while it’s under review. If you have a billing error when paying with a debit card, you’ll have to go without the funds until the matter is resolved.
You can avoid paying for additional insurance. Many credit cards also offer complimentary rental car insurance, so you don’t have to pay extra at the counter. For example, many travel rewards cards provide insurance coverage for damage to or theft of most rental vehicles when the card is used to pay for the entire rental.
The bottom line
When renting a car, always try to use a credit card. This hassle-free form of payment saves a lot of time and protects your finances. You won’t have to worry about the company not accepting debit cards — or failing to meet the minimum requirements — and you’ll enjoy an extra layer of protection from your credit card issuer.