Using Debit Cards

Renting a Car with a Debit Card

You may wonder why car rental companies are so restrictive with regards to using debit cards to rent.

They may not accept them and often, if they do, debit cards require higher deposits, have age restrictions and often require extra identification and/or a credit check. Money is money, right?

The big picture for the car rental company is their determination of your financial responsibility for the vehicle and your ability to pay for it, in full, at the end of your rental period.

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When using a debit card to rent a car the rental company is sometimes limited in its' ability to recoup charges (if you keep the car longer than you say, if you damage the car, etc). For them it would be the same as you handing them a check for the rental costs and then trusting that you would bring the car back in one piece and on time, full of gas! This is why, when using debit cards, they often require a higher deposit at pickup.

With a credit card, the car rental company will charge the full amount of the rental at the end of the contract when you return it.

If you are returning late, they will continue to authorize funds on your credit card because you have not returned the vehicle. By signing the rental car contract you have authorized them to do so (somewhere in the very fine print!) and it will probably also state that they are not liable or responsible for any overdrafts or over the limit fees associated with this.

I checked with www.credit.com and found this statement:

"Many consumers would expect their credit card to be declined if a transaction would put the card over their credit limit. But, increasingly, credit card companies are allowing these transactions to go through, then slapping consumers with an over-limit fee of $20, $25 or more.

This isn’t necessarily a one-time fee, either. If your card balance remains over the limit, you’ll get stuck with this fee every month until you pay down the balance sufficiently."

When using debit cards:

Most vendors (such as the car rental company) have an agreement with the bank, that the bank will honor any charges that they process. You would be charged a fee, of course, from the bank, for going over your limit. It's sometimes called a payment honor fee.

Such a fee is charged when a personal check or direct debit is honored (paid) even though there are insufficient funds in your account.

If the credit card company or the bank issuing your debit card refuses payment to the car rental company, then the car rental company would take legal action against you to collect payment. You would still be charged fees by the bank, the same as if you bounced a check.

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