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No Credit Card? Renting a Car with a Debit Card Just Got Easier

Most car rental companies have long required that their customers use a credit card when reserving a car. Renting a car with a debit card has always meant incurring restrictions and extra fees. But thanks to the rising number of frugal customers who don’t have or don’t want to use credit cards, that’s finally changing.

Dollar Rent-a-Car just announced its new policy specifically aimed at making it easier than ever to reserve a car using a debit card. In a release, the company said its new policy “will eliminate credit checks, reduce proof of return travel and ID requirements, while also lowering the car rental age restriction from 25 to 20 years old.” Thifty will offer the same policy. Hertz owns both companies.

Under the new policy, rentals booked more than 24 hours in advance will only require a debit card and driver’s license. Dollar is also reducing the incidental hold amount from $350 to $200, plus the cost of the rental, for both debit card and credit card rentals. Rentals booked less than 24 hours in advance, or rentals for specialty vehicles, will require two forms of identification and proof of return travel plans.

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The Bias Against Renting a Car with a Debit Card

“Rental car companies tend to view debit-card customers as riskier than those who pay with credit cards,” writes Josh Barro of New York Magazine‘s Intelligencer. “They take the lack of a credit card as a warning sign of bad credit, and therefore think a renter who wishes to pay with a debit card may be less trustworthy with an expensive piece of equipment like a car. They also worry a debit card may be linked to an account that doesn’t contain enough cash to satisfy unexpected charges a customer might incur, such as for a late return.”

Credit cards give rental car companies some protection in the event of a worst-case scenario. If a debit card customer drives off into the sunset with a rental, the company’s recourse is limited to whatever case is available in the customer’s account. Do you have enough money in your debit account to cover the retrieval and likely repair or even replacement of a late-model Ford Focus? Probably not. And you aren’t alone. With a credit card, the company is more likely to receive some compensation for its loss or hardship.

Why It’s Changing

However, the credit card policy has long inconvenienced a large swath of customers, especially younger people. Most car rental companies forbid debit card rentals to customers under 25, and many customers between under 25 are the ones who don’t have credit cards to begin with. Rental companies also hit these customers with an extra fee, even if they do book with a credit card, and credit checks are a hassle that can ding your credit. Never mind that it’s generally good practice to avoid using credit cards when possible.

“For more than 27 years, I’ve been on the radio helping families win with their money, including telling people to cut up their credit cards and only use debit cards,” Dave Ramsey, a financial advisor, said in Dollar’s statement. “I’ve also heard from a lot of callers frustrated while looking for a car rental company that would accept debit cards without all the run around.”

This new policy eliminates those headaches. It’s also no secret that the customer most affected by the policy—customers in their early twenties—are among the most likely to use car-sharing services and other transportation options instead. Eliminating these debit card restrictions might make renting a more appealing and possibly more affordable option for these customers when they travel.  The big question is if other companies will follow suit.

Readers, have you ever rented a car with a debit card? Will this policy make you more likely to rent? Comment below.

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