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Renting A Car With Debit Card
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Some friends and I were recently discussing rental car strategies, one of them was planning a vacation to Hawaii, when the subject of debit cards came up. None of us had ever rented a car with a debit card before (we did begin our personal finance development in the era of free and cheap credit after all!) and that was the only card my friend had! To be honest, I didn’t think it mattered if the card was a credit card or a debit card (and I erroneously said so!), but I was wrong.
I usually advise against the use of debit cards because the card is linked directly to your bank account. One erroneous or fraudulent charge can have a cascading effect that generates an avalanche of fees and penalties. I’ve read and heard many a story of a dozen insufficient fund fees and low balance fees following some key-in error, it’s terrible.
Anyway, it turns out that renting a car with a debit card is a big pain in the ass. The reason is because your “credit limit” is really the funds within your account, unlike with a typical credit card. The end result is that many companies will tack on a “reasonable premium” to cover the rental period and potential overages such as fuel and damage to the vehicle.
For your convenience, here are the policies of major companies:
- Hertz: You can reserve a car with a VISA/MC debit card and a hold will be placed for an “estimated amount of the rental charges plus a reasonable amount to cover any incidental charge.” No mention of what “reasonable amount” means though.
- Enterprise: Policies appear to vary from location to location so you’ll have to call the rental site for actual requirements.
- Budget: Again, like Enterprise, some locations accept them and some don’t. Under 25 can’t use a debit card though. The ones allow debit cards require a hold for the estimated charges plus the greater of 25% or $300 (or $500 in the Northeast and North Central regions).
- National, Alamo: These companies are both owned by Vanguard Car Rental USA Inc. so they have the same policy of allowing debit cards.
- Avis: They allow debit cards and they will put a hold for the estimated rental charges with a minimum of $500. If you don’t spend $500, the balance will be returned but may take up to two weeks!
- Dollar: They allow debit cards and will put a hold for the estimated amount of the rental plus 15% or a “minimum amount,” which isn’t specified. In that General Policies page, it’s section F. Credit Qualifications/requirement.
- Thrifty: Some locations will allow debit cards and may require a “debit card check and credit inquiry screening,” whatever that means. The debit card must also be a VISA/MC debit card, anything else isn’t accepted.
As you can see, using a debit card is a bit of a pain and sometimes the hold can last up to two weeks after the rental! That’s a very long time.
My advice? Get a credit card with auto rental liability insurance and use it to rent your car. The card provides some supplemental insurance, you don’t have to deal with debit card hassles, and maybe you earn a few points along the way.
{ 13 comments, please add your thoughts now! }
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I have rented cars from all these agencies with my debit card over the past year.
The longest anyone took for 3 days to release the hold.
None of these responses refer to a prepaid debit card through Netspend. I no longer have a checking account or credit cards because of 2 really very bad identity theft scares over the last 5 years. I either pay with cash, m.o. cashiers check or use the prepaid card. I plan to rent a car on a trip and the card will be top heavy loaded for any charges that might occur for the car, airfare etc.
What did you find out about the prepaid Netspend card. That’s what I use now and I’m trying to find a car rental company that will accept those. I’ve been told that their system does not recognize those cards.
Hotels are also now instituting similar policies of “holding” an amount in excess of the room charges. The policy seems to vary from hotel to hotel, even within the same chain (i.e. Marriott to Marriott), but most places I have seen with this policy will post something clearly at the front desk – others go so far as to say something when you offer a debit card for payment.
“I usually advise against the use of debit cards because the card is linked directly to your debit card.”
Do you mean that the card is linked to your bank account?
I’ve rented a Budget car by the month several times and the hold only lasts for 24 hours. When I asked at the bank they told me, yes, in Maryland the hold can only be for a day.
Just a minor nitpick. National and Alamo are owned by Enterprise now, so the policies may be changing.
I’ve rented a car with a debit card and didn’t have any problems. I think it was with Enterprise, but to be honest it was almost 3 years ago so I don’t remember the details and policies may have changed since then.
Just last week I used my debit card to pay for a hotel and cover the incidentals and whatnot. Again, that was not a problem at all.
I think the important distinction is actually having money in your checking account! If you are cutting it close with bills every month or living paycheck to paycheck you really should use a credit card instead. If you have a float of $1,000 – $2,000 in your checking account you can easily handle rental cars and hotels.
Nice roundup; I’m actually surprised that many chains let you use a debit card at all.
Personally, I would be extremely nervous renting a car on debit card given how open ended the potential for extra charges is — unlike an airline ticket or (under normal circumstances) a hotel room, there are a ton of extra fees that could come into play with a rental car, not to mention the potential for the rental agency to assess (wrongly or rightly) charges for damages. It just seems like its a lot safer to have the consumer protection of a credit card. (I think this is even more true when renting from U-Haul, which is known for some pretty shady practices…)
Just rented a car for a week with Avis and the hold was gone before I got off the plane (within about 5 hours).
I did have a reasonable amount of financial “cushion” in the account, which if you are going on vacation, you should probably have anyways because if a plane gets grounded you’ve got extra hotel costs, or if a medical emergency happens, etc.
I have a current rental from Deluxe Rent-a-Car in Los Angeles who is charging me $4.99 per day because I’m using my Visa sponsored debit card. There are ample funds in my account and the representative could only explain the charge was simply “company policy” and nothing more – kinda insulting. The car is great, but this charge is bugging me. Bank of America had no explanation either.
The amount of money in your checking account has nothing to do with anything. I always have around $2000 in my checking account and it makes no frigging difference. I always have a lot of trouble trying to rent a car with a debit card.
I have rented from enterprise multiple times, they take a hold of whatever the expected total will be plus $200.00. I have called and requested that I keep a car for up to a week longer than the intended length and it was not a problem and I have traveled as far as 4 states away, with thier knowledge and it was not a problem. They do require that you bring a utility bill with your home address and a pay stub with you however.