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Renting a car frequently requires a credit card. At best, renting a car is more of a hassle with a debit card. Sure, I'm using their stuff, but putting a £1000 hold on my Visa Debit should work just as well as putting an equivalent hold on my credit card (except that my current account balance is almost always far larger than the credit limit on any credit card I've ever had, which have always been secured, so I don't get the risk of insufficient funds argument either).

What can a car rental agency do with a Visa Credit Card that they cannot do with a Visa Debit Card?

For booking accommodation, Visa Debit works. Why not for rental cars?

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gerrit
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6 Answers6

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A hotel can accept the debit card because each night they can withdraw the money. If you don't have sufficient funds they can instantly lock you out of your room. They an also limit your ability to access room service, and other extra expensive options.

The rental car can't do that once you have the car. Plus they never know if you will bring the car back with damages, toll charges, and an empty tank of gas.

mhoran_psprep
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Deposit on a Debit Card have a different effect, and many people don't understand it (and make a big stink), or cannot afford it (or both). Either of it results in lots of trouble for the business:

  • Putting a deposit on a Credit Card limits the remaining spending ability on the card; if the customer doesn't max out his credit cards, it has zero effect on him.
  • Putting a deposit on a Debit Card blocks the customers money for the duration, and disallows him access to it, which for many people is significant.

In addition, having a credit card showes that some bank trusts the customer with an unsecured credit of this height, which is some reassurance for the business. A debit card proves only that he was able to get a checking account, which needs much less liquidity and stability.

Aganju
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People with credit cards tend to have better credit than those who only have debit cards. People with better credit tend to not abuse such things as car rentals. It costs money for any company to run your credit. It doesn't cost a rental company any outflow of money to reject debit cards. So the possession of a credit card becomes a stand-in for running your credit before you rent a car.

Jack Swayze Sr
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I am not sure if this is the actual reason or not, but all of the major credit cards (Visa, Mastercard, Amex, Discover) provide damage insurance coverage on car rentals. Debit cards do not usually provide this coverage. So, if you use a credit card, the car company knows it will be able to recover the cost of any damage to the car.

Of course, this doesn't explain some of the odd debit card policies out there. For example, Alamo will not let you use a debit card unless you provide proof of round trip travel (like a plane or cruise ticket). But you can use a credit card without having a travel ticket. I'm not sure how having a travel ticket makes debit card users less of a risk, but apparently it does somehow.

Tom V
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A few reasons make sense:

  1. Because they can.

They have a defined process for rentals, risk assessment, and customer credit. Especially for a large corporation, making changes to that process is not trivial, adds risk/uncertainty, and will be costly. Such changes for a relatively small customer base might not makes sense. Many rental companies DO allow you to rent with a debit card. Why do some businesses take cash only?

  1. Fundamental difference between debit and credit.

With a debit card, there is no third party guarantee. With a credit card, the cash is coming from a well-established third party who will pay (assuming no disputes) and has a well-established history of paying. Even if the merchant holds your account, it is still your cash under the control of you and your bank until the deposit clears the merchants bank. It is not surprising they view that as more risk and potentially not worth hassling with debit.

jkuz
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I have looked at the conditions of a car rental company, and I believe it provides the answers:

Upon pick up of your vehicle, you must present a valid credit card (*) used to make the booking and which must be in the driver´s name. If you do not have a valid credit card we will accept your debit card when you pick up your vehicle. However, as we cannot reserve credit to cover the potential damage or refueling costs, you will need to take SuperCover and a fuel tank of fuel at the start of the rental. We will refund the value of the unused fuel at the end of the rental unless otherwise agreed with you. (*) VISA, MasterCard and American Express are accepted.

Credit card or Third Party Insurance IMPORTANT: In case of damage, we will charge you the incurred amount up to the excess. You will then need to reclaim this amount from the provider of the credit card or third party insurer. We strongly recommend that you fully read and understand the terms and conditions of any cover provided by your chosen provider before you decline any of our optional services. Without our SuperCover, should you damage the vehicle during your rental period, we will charge you the corresponding amount up to the excess, regardless of whether you can subsequently reclaim this amount from the provider of the credit card or the third party insurer. In the event you would like to dispute any of the above mentioned charges you should send your request by mail or email to the Firefly location state on your rental agreement.

https://global.fireflycarrental.com/qualifications-ES.html

From that, we can conclude that :

  • demanding a credit card can be a pretext to force customers to buy full insurance (in this example, SuperCover) to the car rental company. The conditions state that "[they] cannot reserve credit to cover the potential damage or refueling costs [with a debit card]" ; which is utterly wrong. The customer buying full insurance will increase the revenue of the car rental company, and reduce the risk of disputes in case of damages.
  • as credit cards may include insurance, demanding a credit card to the customer can reduce the risk of disputes when the car rental company charge excessive amount for damages. They can say to the customer that the credit card insurance will help refunding it.

It's likely that disputes with customers in case of damage cost a lot to car rental companies, and for the 2 above reasons, demanding a credit card may alleviate it.

user62098
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