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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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  • I've never had a problem using my MC check card for rental cars. They normally preauth/hold a deposit and/or the expected charges (charge/day x days)
    – AbraCadaver
    Oct 22, 2015 at 19:58
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    Complete aside: If your current account is far larger than your credit limits, I'd suggest you're doing something wrong: either not using credit cards enough or carrying too much cash in your current account or both.
    – Peter K.
    Jul 2, 2017 at 16:29
  • @PeterK. I'm confused. When I asked this question, my credit limit was £250 yet my net salary £2000/month, with rent £695/month. By now they have doubled my credit limit but my salary is still the same. What was/am I doing wrong?
    – gerrit
    Jul 2, 2017 at 19:42
  • @gerrit I think that Peter is referring to the money you've got left over after all of your bills are paid. Unless you're living with your parents who pay everything except rent (food, insurance, TV, phone, etc), you must have more monthly expenses than just £695.
    – RonJohn
    Jul 2, 2017 at 23:10
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    @PeterK. I get 0.3% interest on my savings account, and keep about 3 months in my current account. My credit card limit is low because I'm new in the country, and cannot apply for a regular card until I've lived here 3 years, so I have a crappy card (£250, now £500 limit, 59% APR).
    – gerrit
    Jul 3, 2017 at 11:15

6 Answers 6

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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.

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  • 4
    But how is insufficient funds more of an issue with debit cards than with credit cards? I might be just below the credit limit.
    – gerrit
    Oct 22, 2015 at 17:46
  • If holds worked perfectly nobody would ever overdraw their account, or go over their credit limit. But it is easier to have an insufficient funds occur with a checking account.
    – mhoran_psprep
    Oct 22, 2015 at 19:20
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    The credit card limit is a soft limit. The card company can let charges go through that result in a balance that exceed the limit.
    – Eric Johnson
    Mar 17, 2017 at 12:10
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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.

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  • Central European perspective on this: a customer having the full deposit on their debit card is known to have (at least) this much liquid money (i.e. can afford it). Someone who needs to use their credit for this may (probably?) not have that much.... Conclusion: I guess it's mostly a matter of culture.
    – cbeleites unhappy with SX
    Apr 4, 2018 at 18:15
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    @cbeleites , there is a big difference on how debit cards work between the continents - in Europe, banks allow ‘overdrawing’ bank accounts to an agreed limit. That concept does not exist in the US; the credit card takes its place. Also, most people in the US don’t have enough money in their account; and - more important - banks don’t cover fraud (at least not quickly). I would never use my US debit card anywhere outside the bank, as fraudsters could clean me out in minutes.
    – Aganju
    Apr 4, 2018 at 23:22
  • yes, I know. Anyways, your US debit card probably would not work at all with European ATMs (once had a Canadian debit card of a bank that advertized collaboration with particular European banks to allow withdrawals without foreign country fees - just that the card wasn't up to the technical standard of the European ATMs... European debit card worked flawlessly in Canada, though.)
    – cbeleites unhappy with SX
    Apr 4, 2018 at 23:48
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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.

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    Sounds plausible, but is this the actual reason?
    – gerrit
    Oct 23, 2015 at 9:13
  • @gerrit It sounds good but IMO, this isn't the reason, and I believe so because anyone, anyone who's a little smarter financially would avoid getting a credit card. And if the person is financially smart then probably he has a good credit too. The sooner people realize that credit card is sin, the better they become, financially at least.
    – Anoneemus
    Mar 16, 2017 at 7:20
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    @Anoneemus No, a financially smart person understands the pros and cons of a credit card and makes them work to their advantage. Thinking they are 'sin' is way too simplistic.
    – Andy
    Jul 2, 2017 at 18:36
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    @Anoneemus I much rather keep a credit card in my wallet in case I need to spend a lot of money at a moment's notice (car breaks down; pet needs emergency vet care; basically, anything where you need to pay for something right away and getting an invoice is not an option) than have the equivalent amount just sitting in my bank account earning zero interest just on the off chance that I might need to spend a lot of money at a moment's notice. Mind the difference between having a credit card (which can be a smart thing to do) and carrying a balance (which is almost always a dumb thing to do).
    – user
    Aug 29, 2017 at 13:30
  • I think this is probably entirely a matter of the general culture. To the point that my German "credit card" behaves like a credit card seen from outside (so there's no difficulty using this for, say, car rental in North America), but is actually operated rather like a debit card internally (comparably low credit limit - but then I never asked for more since I got the card as student, I can adjust the spending limits by putting money there and then [temporarily] rising the daily/weekly limit as needed). And btw, the money deposited to that card yields interest like 4 year fixed term money.
    – cbeleites unhappy with SX
    Apr 4, 2018 at 18:25
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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.

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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.

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  • I very much suspect that your point 2 is country-specific. E.g. considering the situation in Germany, credit cards for store owners come at a considerable risk of dispute, and while one of the two ways to operate debit cards here makes a dispute even easier for the customer, there is another operation mode that avoids this risk.
    – cbeleites unhappy with SX
    Apr 4, 2018 at 18:36
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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.

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  • but why they can not reserve all required money from debit card, and then cancel transaction. I am aware this money will be temporary deducted from your bank account.
    – Hrvoje Kusulja
    Nov 10, 2017 at 20:58

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