Dear Credit Card Adviser,
I'm 25 and have never had a credit card. I'm about to travel and figure I need a Visa in order to rent a car. I have plenty in the bank for this trip and a Visa debit card, but I've heard some travel services require a credit card.
What is my best option at this point? -- Alex
If your trip is coming up soon, you may not have time to apply for a credit card and wait for its arrival in the mail. The good news is that you'll most likely be able to use your debit card to initiate the car rental. The bad news is you may need to jump through some extra hoops because you're not using a credit card.
Depending on the company and branch location, you may or may not be able to use your debit card to rent a car. I urge you to check the debit card policy at the specific location where you'll be renting the car. Here are some questions to ask.
Does this location accept debit cards? Some of the major car rental agencies generally allow debit cards to be used at the time of pickup, but not in all branch locations or in all situations. For instance, Budget's website states that some locations may require a credit card, usually for popular cars that are in low supply.
Will an authorization hold be placed on my debit card? Some companies will place an authorization hold on your card for the estimated car rental charges, plus an additional amount to ensure that you have enough money to pay for the car rental. Until you return the car and the hold is released, those funds won't be available for use. If you don't have a lot of money above this amount, new transactions could overdraw your account.
The hold could tie up a significant amount of money during your trip. For example, Avis states on its website that it places a hold of $200 plus the estimated rental charges, or $100 if you prepay the car rental. Hertz holds up to $200 more than the total estimated charges.
Do I need to show proof of round-trip travel? Some agencies require debit card holders to provide proof of a round-trip travel ticket, such as an airline or train ticket, at the time of rental. For instance, at Alamo, Avis, National Car Rental and Enterprise, a customer renting a car in the U.S. without such proof can only use a debit card for payment upon returning the rental car.
Will you check my credit? Some agencies will want to peek at the credit record of renters using debit cards to ensure that they are dealing with a responsible borrower. This kind of credit inquiry is the type that could lower your credit score by a few points. For example, Dollar, Thrifty and Hertz perform credit checks on debit card renters.