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Using a Debit Card to Rent a Car
Can you . . . Should you Rent a Car with a Debit Card?
In 2012, the issue of using a debit card to rent a vehicle is becoming ever more present as renters are wanting to keep those high interest credit cards in their wallets. Renting a car without a credit card can be problematic for both renters and car rental agencies. Compared to a credit card, a debit card provides a significantly higher level of risk for the car rental company and while many USA car hire companies are opening their policies to the use of debit cards, there are some pit falls renters need to consider before they plan to hand over their debit card for a car rental. The good news is that it can usually be done.
Photo Used under Creative Commons from MoneyBlogNewz
Quick Polls: Who's Viewing This Page?
Before we get into the subject matter, here are a few poll questions regarding your opinions on this issue. Take a couple of moments to answer these questions (remember Squidoo members get points for it).
Have you ever rented a vehicle in the past?
With A Debit Card?
Have you Ever Rented a Vehicle using a Debit Card?
Credit vs. Debit?
Do you think it is better to use a Debit Card or a Credit Card to Rent A Vehicle?
When Are You Renting?
When are you planning to rent a vehicle?
Informataive Books on Car Rental
A Debit or Check Card is Not a Credit Card
Many debit and check cards can be used to run a credit transaction. This does not make a debit card a credit card and the car rental company will not (or at least they shouldn't) accept a debit card as a credit card. Accepting a Debit Card as Credit Card for a rental transaction can cause problems for the renter as well as the Car Hire company (we'll take a closer look at this later in "Additional Deposits May be Required"). All cards have a Bank Identification Number (BIN) attached to them. When the card is run at the open of the transaction, the car rental company will likely check the BIN to determine if the card is a credit card, debit card, or pre-paid card. If the BIN returns information that the card is something other than a Credit Card, the policies regarding the type of card will apply. This also means that if the company does not accept debit or pre-paid cards, the rental of the vehicle will be denied to you.
If you are not sure what kind of card you have, you should call your card issuer using the phone number found of the back of the card for more information.
Not Everyone Can Use a Debit Card to Rent a Vehicle
Companies will have differing policies for when a debit card will and will not be accepted for a rental. You will need to read the company policies completely, contact the company's customer service department, and/or call ahead to the rental location directly before arriving to rent a vehicle if you are planning to rent a vehicle using a debit card. In many instances, a debit card will only be accepted for qualified customers who can provide a round trip airline itinerary that matches the dates of travel for which the rental of the vehicle will be done. I have also come across companies which impose additional restrictions based on age and proof of insurance.
Additional Deposits May be Required
An additional deposit over the opening estimated total of the rental may be required when you open the rental transaction using a debit card. This deposit is required for your protection as well as the company's. Please bear with me as this is a rather complex issue which needs a relatively lengthy explanation.
Before we get started, let's quickly go over authorizations and payments. An authorization or hold is a temporary transaction used to reserve a specified amount from the available balance of the card. The authorization will usually show as a "Pending Transaction" or similar on the transactions for the card. A charge or payment is a permanent transaction which is debited from the available balance of the card. Charges will usually appear as "Posted Transactions" or similar on the transactions for the card. When an authorization is obtained and a charge is subsequently taken from that authorization, it usually takes 2-7 days for the transaction to move from pending status to posted status. However, please note that this is not the case when a PIN is used to complete a debit transaction. Most PIN transactions will automatically appear as posted transaction.
When using a credit card, an authorization is taken at the open of the rental agreement. The amount of the authorization that the company will require tends to vary, but it is usually in the amount of the estimated total of the rental or a set percentage / dollar amount over the estimated total. Note: Car rentals are shown as an Estimated Total at the open of the agreement because the cost of the rental may change for many reasons such as the vehicle could be returned late / early costing your more / less than estimated at the open of the rental or charges could be added for fuel, etc. Authorizations on credit cards will usually last between 10-20 days or for as many days as the rental of the vehicle is scheduled. When the vehicle is returned, the charges are finalized and the actual total of the rental is charged to the card using the original authorization (provided you do not change the payment method on return).
An authorization will only last for 3 to 5 days with many debit and check cards. If the authorization is not confirmed within the required time frame, the authorization will expire and be released back to the available balance of the card. There are many potential problems for you and the rental company when only an authorization is obtained at the opening of the rental, because most car rentals last more than 3 days. If the authorization is released, the money which was to be reserved for the cost of the rental could be spent by the renter on other things before the rental is completed and the car rental bill is paid. The bank / card issuer may or may not accept a charge to the original authorization even if it has been released. This means that your account could be overdrawn if the necessary funds are not available when the finalized charge posts to the account or the transaction could be rejected by the bank / card issuer. Either way, this would present a major problem for you and/or the car hire company.
Some car rental companies have adopted deposit policies to prevent many of the potential problems caused by the authorization / payment process of a debit card. As opposed to simply obtaining an authorization, the company will charge the debit card for the estimated total of the rental plus a deposit. The amount of the deposit can be as much as $500.00 more than the rental. When the vehicle is returned, the deposit is usually refunded, but it may take several days for the refunded amount to show up in your available balance. Refunds will usually take as long to return to the account as it takes for a payment to move from pending to posted transactions. Note however that unlike a payment, an authorization is not required to issue a refund and you will likely not see a pending transaction showing that a refund is in route.
NSF, Overdraft, or Similar Fees
All car rental companies will have terms built into their rental agreements which state that they are not responsible for any fees which are imposed by your bank / card issuer which may be caused by any of the authorizations or charges from the car rental. These terms are set up as a result of the complex nature of the debit card car rental process. Before you use your debit card for a car rental transaction, you should be sure to have more than ample available funds to pay for the rental.
Pre-Paid Cards are uniquely different from standard credit cards and bank issued debit cards. Some common examples are the Emerald Card issued by H&R Block and the Account Now Pre-Paid Visa and Master Cards. Many car rental companies will simply not accept these cards. However, if you are permitted to use these cards for a car rental, be aware that these cards pose several more complicated issues than bank issued credit cards. Many of these cards have specific warnings regarding their use for a car rental transaction. You should read all of the terms and conditions of the card before you consider using them for a car rental.
Amscot Pre-Paid Master Card
The Amscot Pre-Paid Mastercard is not a debit card. The Amscot FAQ's indicate that purchases may be denied at car rental agencies because of insufficient funds. Be aware that not all car rental agencies will accept the Amscot card, and you should call the car rental location directly for additional information about wanting to use this type of card.
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