So you’re looking to rent a car and wondering which credit card to use. Or maybe you’re wondering if it’s okay to use your debit card instead of a credit card. Or perhaps you don’t have a credit card or debit card and want to pay with cold, hard cash. Considering that the major rental companies and card companies have different policies, the answer may not appear straightforward. But don’t worry—we have a few guidelines for choosing the best payment method.
Credit Cards: Easy with Extra Protection and Perks
Do you have a favorite credit card or perhaps multiple cards? There are several reasons why paying for your rental car reservation with a credit card is the best option. Paying with a credit card brings several layers of protections and benefits you won’t get with other payment methods.
For starters, most credit cards come with some kind of car rental insurance, which means you can decline the pricey CDW offered at the rental car counter. Most credit cards provide secondary coverage that kicks in after your personal auto insurance limit is reached. Some credit cards offer primary rental car coverage, which means that if you are involved in an accident, your auto insurance company does not get involved at all. If you have a credit card that offers this benefit, it usually makes sense to use this card when renting a car, especially if you have recently filed a claim with your auto insurance and would prefer not to risk your premium getting jacked up.
Do you have multiple credit cards? Compare the benefits and perks that come with each one. Using a credit card that delivers tons of great travel benefits can save a significant wad of money, since you often get free services or cash back for purchases you’ll be making on your trip. Other good bets are credit cards that have no annual fee or charge 0% interest.
Reasons to Pay for a Rental Car with a Credit Card
Credit cards can also provide support if you have to dispute a charge at the end of the rental process. Credit cards have better customer protections for disputes than debit cards do. When you pay with a debit card, the rental company can potentially take an extra amount from your checking account if there are extra repair costs or fees.
In general, rental car companies will hold an amount on your card to cover the cost of the rental plus a deposit to cover any incidentals or additional fees. For example, Enterprise will hold the cost of the rental plus a 20% security deposit for incidentals. The time it takes for the hold to be removed from your card depends on the rental company and the card issuer, but in most cases you will get these funds freed up more quickly when using a credit card. Enterprise, for example, will release the hold immediately when credit card customers return the vehicle in good shape. Debit cardholders, on the other hand, have to wait five to 10 business days and have to maintain that cushion in their bank accounts in the meantime.
Lastly, it’s simply easier to pay with a credit card. Rental car companies typically accept a wider variety of credit cards and may require debit cardholders to jump through a few extra hoops, such as booking 24 hours in advance, providing multiple forms of identification or even undergoing a credit check.
Debit Cards: Doable but More Complicated
If you are a young driver, you may not have established credit yet. If you don’t have a credit card, it is generally possible to rent a car with a debit card. While some car companies have age restrictions, it is usually easier to rent from Thrifty and Dollar using a debit card. Thrifty’s Blue Chip Rewards members can waive the higher security deposit by using a Visa-branded debit card.
Cash: Try to Avoid
Cash may be king for certain things, but a rental car reservation is not one of them. If you want to pay for a rental car with cash, be prepared to begin the process more than a month in advance and jump through many hoops. For example, Hertz and Thrifty require signing up for an ID card that can take a month to receive, not to mention providing many pieces of personal documentation and undergoing a credit check. Many rental companies will not allow you to secure a transaction with cash at all, so this option should be a last resort.