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.