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Buyer Beware: Renting a Car With a Debit Card

My wife and I have chosen to be debt free and live without the use of credit cards. 99% of the time we have no issues when it comes to purchases. We simply swipe our debit card or pay with cash when making a transaction. The one instance where we’ve had difficulty is when we are renting a car with a debit card.

We’ve run into trouble twice with this and in both cases it nearly had us stuck. The most recent time, on our vacation to Yellowstone a few weeks ago, nearly cost us our trip.

renting a car with a debit card in cody, wyomingMy wife is an incredible trip planner. She can research and organize a trip with such precision I hardly have to pay attention. The most I end up doing in the trip-planning phase is giving minor advice and approval to her vacation to-do requests.

So when the chance came to save $700 on our rental car for the week that was a no-brainer. “Heck, yeah” I said. “Book that!”

My wife is member of the AICPA (the American Institute of  CPAs). As a member she is entitled to discounts with companies with whom the AICPA has an affiliation. One such company is Hertz.

She did all the fine-print reading ahead of time and found out Hertz does accept debit cards for rental car purchases. The one caveat is they require a credit check before releasing the car. That should have raised a red flag for us but we just missed it. (Our credit is of course shot because we don’t use credit anymore.)

So we booked a minivan with Hertz two months prior to leaving and didn’t give it another thought.

Renting a Car With a Debit Card: A Nightmare Scenario

“Sorry ma’am…I can’t release the car to you.”

Those are not the words you want to hear at a rental car counter period, let alone one in Cody, Wyoming at 9:00 pm at night on the first day of your vacation. No offense to Cody but it’s not quite like Atlanta. Your options are a bit limited.

The Hertz agent was reacting to information spit out by his computer system when he ran my wife’s credit check. Evidently it came back with a resounding, “No! Don’t rent to these people…they are a terrible risk!”

An attempt to run my debit card through the system (which I knew would be futile) resulted in the same automaton response from the agent.

“No car for you!”

“What are we going to do?” my wife asked him. “We have a week’s vacation lined up. How are we going to get around?

No joke…he literally reached over and handed me a business card for a cab service.

He proceeded to tell us there was nothing he could do – that all rental car companies have this policy. It’s standard throughout the industry. Giving me a waiving motion with his hand he defensively said, “You go anywhere – try next door to the other rental car companies – and you’ll find they do this exact same thing.”

Now, I don’t like being in a desperate situation but I like being lied to even less. So I calmly but firmly shot back.

“No they don’t,” I said. “I’ve rented cars using my debit card before and all they do is put a hold on a certain amount of funds from your checking account. Don’t tell me it’s standard policy…It’s your company policy.”

“Well I’m not going to release the car to you sir. If I do I’ll be SOL. There’s nothing I can do.”

“So what are we going to do?” my wife said for the third or fourth time in the conversation, her voice cracking with fear as our unaware kids tumbled around in the background with the luggage.

Our Savior

At that point we only had three options in increasing level of severity:

1) Hope the only other rental car services open in the airport – Budget or Avis – would give us the option of renting a car with a debit card.

2) Call the cab service and have them drive us to the nearest big city where we might have more rental car options.

3) Book a flight back home and cancel/postpone our vacation.

Of course we chose option one but with great fear we might be headed to options two or three. So with great nervousness we stepped up to the Avis rental car counter.

At this point there is no need to go into details about what has just happened or the desperation of our situation. The Avis counter is right next to the Hertz counter so the Avis agent has heard the whole conversation. It’s not as though he’s been helping dozens of other passengers because the Cody airport is hopping at 9:00 pm on a Friday night.

I simply asked him one question…

“Can we rent a car from you using our debit card?”

“Sure” he said. “We do that. I don’t know what that other agent was talking about. Our policy is that we put a $200 hold on your checking account. Let me run your information through our system and see what I can do for you.”

Relieved, I looked over at my wife. I reached out to grab her trembling hands. We were going to be OK.

Ten minutes later he had booked us in a Toyota Sequoia – a little bit tighter fit with our luggage than the minivan we had hoped for but I wasn’t complaining. He even reduced the rate on the vehicle, even though we ended up paying four times as much as we had planned because Avis does not have an affiliation with the AICPA.

I wasn’t complaining about that either. We were just thankful to be on our way. Thank you Avis and the agent at the Cody, Wyoming airport.

Why Rental Car Companies Require a Credit Card

You may be wondering why rental car companies require a credit card in the first place. For them it’s all about security and recouping losses due to damage or theft of the vehicle.

For example, if I rent a car using my debit card then the rental company is limited in the amount of funds they can recoup based on the amount of money in my checking account. That amount could be $10,000 or it may be $500. In the first case they could get to a lot….in the second, hardly any. There would be insufficient funds to compensate them for a vehicle loss or damage. They don’t want to take the risk that I have little to no funds in my account.

With a credit card they are able to go after a higher amount. Each user has a credit limit up to which they can spend, usually in the thousands of dollars. That limit represents a greater portion of secured funds the rental car company could go after. It’s less of a risk and they’ll have a greater likelihood of tracking you down and getting the funds they need.

In short, they will be getting paid no matter when – or in what condition – you return the car.

What to Do Before Renting a Car With a Debit Card

If you plan on renting a car with a debit card the biggest piece of advice I can give is to call ahead. Don’t take the word of any company policy you read on the Internet. Call the company you wish to book with in advance and get clarification on how to do it and what they require.

Don’t let anyone ever tell you that all rental car companies require a credit card. It’s simply not true. But realize some do and they will not budge on their policy. Enterprise and Hertz are the two companies I’ve had issues with so avoid them if you are using a debit card.

I know some credit card enthusiasts will jump in and say, “See this is why you need a credit card…for these type of emergencies.” I get that. And believe me, in that moment when we realized our mistake I wished I could have pulled one out and handed it to the agent.

However, until the entire industry makes it a standard policy I’m not going to change my “no credit card” lifestyle. I still have options for renting a car with a debit card. I just didn’t plan very well. So that’s on me, especially since this had happened to me once before.

But I’ll tell you this…I’ll never let that happen again. The stakes of being stranded or ruining a vacation are too high.

Questions: Have you ever had trouble renting a car with a debit card? Ever been stuck at a rental car counter, unable to get a car? What other companies besides Avis do you know allow a debit card to be used to rent a car?

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Comments

  1. Well AVIS left us stranded today. My Credit Card info was stolen so I put a block on my CC while visiting my in laws in NC, reserved a Minivan with AVIS to return to FL plan was to now use our Debit Card to rent. At the counter we where told with Debit Card Avis has to perform a credit check and declined us.

  2. We love the public transportation systems in other countries. Thanks for sharing this informative post.

  3. Chris Kollmar says:

    Actually happened to me this morning. Cue the Seinfeld episode, our car was in the shop, so we needed a car to get around for the day. My wife, from home, rented a car through Enterprise. I get there, first, no cars. Finally, found one, couldn’t use my wife’s card due to different last names. I don’t have credit cards anymore, so i have to use my debit. They say ok, can you produce a copy of two billing statements from companies, i.e. Electric, cable, dish. So, now i have to try and remember passwords and actually send them copies of account info. Finally goes through, $150 hold. No problem, but if i would have only had a credit card for such occasions. They were actually super helpful. Just kind of a pain to get the car.

  4. Hey Brian,

    Sounds like quite the hassle! Unfortunately, this problem may be getting more common. I just bought a homeowner’s insurance policy where they ran my credit as part of their “probability of loss” calculation. I was surprised that they would use credit. I guess as credit is more and more ubiquitous, more and more institutions are going to want to use it.

    -N&$

    P.S. I love your Seinfeld reference 🙂
    NumbersAndSense recently posted…Rent Everything (1 Cor. 7)My Profile

  5. While we currently have a credit card (hubs’ international travel makes that hard to get around because you can’t buy $3k worth of airline tickets with a debit card) we only had debit cards for years. And I always rented from Avis, never thinking twice. Their policy is a lot like how hotels do debit cards, too.
    Kirsten recently posted…Can Crowdsourcing Student Loan Debt Work?My Profile

  6. I always use my debit card to rent cars and it’s never a problem – they usually put a hold on your card for $50-$200 and then release it once you return the car.
    Natalie recently posted…What It Means To Trade Your Time For MoneyMy Profile

    • That’s what we usually do also Natalie but with some companies it apparently is not that simple. Got to know the rules before you rent from anyone.

  7. Mitchell Maloney says:

    I’ve never used a debit card to rent a card. We are “too enthusiastic” users of charge cards for almost all our purchases and always pay on time every month.

  8. When I read the title I thought maybe your story was going to be that your info got stolen. Both scenarios are bad though. I recently used my debit card at a sketchy place in Denver and I was a bit worried they might try to steal my info. I should’ve used a credit card instead.
    Kayla recently posted…5 Easy Steps to Eliminating Personal DebtMy Profile

    • There are still protections with debit cards. When we use our Visa debit card I always choose the “credit” option at checkout. That forces the register to print a ticket that I must sign. I never use my PIN…not even sure what it is. Once I sign the ticket I’m protected by Visa’s policy and will have money replaced in my checking account if stolen and I report it in a timely manner.

  9. I have actually never used a debit card to rent a rental car because I do know that they put a hold on your account and my fear is that they will pull the money from my checking account and it will take them weeks before they put the money back. At least when it’s on your credit card, you can get the charge reversed. I also have rental car insurance through my credit card company when I rent a rental car, so I like the added protection.
    Shannon recently posted…Music Mondays – I Can See Clearly NowMy Profile

  10. We do use credit cards, so I have not personally run into this issue but I have heard that car rentals and some hotels can be fussy. I understand their reasoning as I’m sure they have been burned plenty of times too, but I just wish they made their policies very clear. It is also unfortunate that not using credit cards means you have a lower credit score too. I’m so glad you were able to get it resolved relatively pain-free because, like you, I would have been feeling pretty panicked at 9:00 p.m. facing limited choices! Hopefully, the rest of your vacation was stress-free and fun!
    Shannon recently posted…The Financially Sound Podcast with Shannon RyanMy Profile

    • “…not using credit cards means you have a lower credit score too.” The irony…do the right thing by getting out of debt and it hurts you in some situations because of our credit based system. And yes…the rest of the trip was extraordinary. Had a blast! 🙂

  11. Sorry for your troubles! But thanks for sharing and giving us credit-free readers some tips. Easy to say “See, need a credit card”. But good for you for seeing the bigger picture!
    Luke Fitzgerald recently posted…Top 3 Benefits of a BudgetMy Profile

  12. That’s strange that Hertz didn’t accept your debit card. I’ve rented cars before with my debit card and like Avis all they do was put a hold on my checking account. Oh well, I’m glad it worked out for you and now you know not to use Hertz.
    Aldo recently posted…I “Won” a “Free” Vacation!My Profile

    • Their computer system rejected us when it pulled our credit (which is low because of our debt free lifestyle). It’s a mixed up system when you can’t rent a car due to wise lifestyle choices (being debt free) when at the same time you have the ability to write a check and buy the car outright.

      • I had this happen to me recently. Unfortunately, I had used the pay ahead option to get a bigger discount. When I was denied the car for using a debit card and having a low credit score they refunded me my money… Less a $100 fee for “cancellation” !!! I was so angry. I’ve fought tooth and nail.. Still can’t get them to return the money.

      • I’m sorry to burst your bubble, but cancelling all your credit cards is why your credit score is low, you don’t need a credit card to earn credit, but closing even one out will ruin it by at least 50-100 points. Also not having a credit card is in no way a smart lifestyle choice, just because you have a credit card doesn’t mean you have to have it maxed out all the time, you could have it payed up all the time, use it when needed and put the money back in before the month ends to avoid interest, honestly that’s the smart choice, as for renting you can use a credit card to secure the rental with an aditional $200 hold and then pay up after the rental using your debit card so your credit card never even gets charged/

  13. So glad that Avis ended up renting to you Brian – though sorry for the overall experience. On one hand, this just goes to show you how the credit scoring system is backwards since you’re entirely debt free but do not use credit cards.

    That being said, we’ve had numerous hassles with car rental places – I always hate dealing with them because I know it’s going to be a pain in the neck. No matter where we go we get the same hassle because we don’t choose the overpriced insurance. The reason is that we use my wife’s USAA card – which is tied directly to our USAA insurance. Due to that, if we get into an accident in a rental car, we’re covered and all we’re out is our deductible. We’ve had some reps tell us we’re idiots for passing up the insurance. Unfortunately it just seems to be an industry filled, for the most part, with shady or less than desirable tactics.
    John recently posted…How I Lost 100 PoundsMy Profile

    • Those insurances are where they really can make money. They are like the extended warranties on appliances or computers…so often going unused. Our auto insurance covers use of rental cars so we never go for the ad on insurances.

  14. I’m so glad Avis rented to you! I have plenty of credit so I have never had that problem, BUT I have had other problems renting cars before. Car rental places are awful about overbooking and having awful customer service. Dollar Rent-a-Car also tried to convince me that the $250 insurance for the rental was not optional for a three-day car rental in Orlando that only cost $150 to begin with. They acted like I was crazy for declining even though I have rental car coverage on my personal auto policy and the credit card I booked the card with had primary rental car coverage as well. They are a bunch of scam artists.
    Holly recently posted…Use myVEGAS Slots to Earn FREE Meals and RoomsMy Profile

    • Haha…that’s funny/sad they would try to persuade you of that. All those insurances are optional and most of the time unneeded. Our personal auto insurance covers our use of rental cars and is all the insurance we need.

  15. We have an experienced like this one before! As far as we know, we already booked a rental car, but unfortunately when we called the rental company they apologized to us and they only told us that there were no available car that time.
    Clarsisse recently posted…The Best Markets to Invest in South Florida Real EstateMy Profile

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