Why Car Rental Companies Insist On Credit Cards For Obtaining Reservations

Posted by Nick Niesen on October 29th, 2010

If you have ever rented a car, regardless of how you planned to pay for the actual rental, the car rental company probably asked you for a major credit card. It is standard practice for most car rental companies to require their customers to provide a major credit card at the time of rental.

Beyond simply asking for your major credit card information, most car rental companies will obtain a credit card authorization and advance charge approval to cover expenses related to any potential damages to the car while it is in your possession. In essence, your major credit card is held as a security deposit against loss or damage.

If you turn back the car in perfect condition, nothing will be charged to your credit card except for the rental fee. However, if the car is damaged while it is in your possession, your credit card will immediately be charged with an appropriate fee based on the terms of your rental agreement.

The rental company will not actually charge a fee to your card at the time you rent the car. However, by obtaining an advance charge approval, the rental car company in essence reserves a certain amount of room on your card for charges they might have to make in the event the car is damaged while in your possession.

Keep in mind that all plastic is not created equal. When it comes to renting a car, there is a big difference between a credit card and a check card or debit card. Many car rental companies will not accept check cards or debit cards for rental car security deposits. Rental companies cannot process advance charge approvals against debit or check cards, and so do not accept such cards for security deposit payments.

Before letting you complete the car rental transaction, the rental company will get permission from you to charge your card if something does happen to the car while you have it. Additionally, the rental car company will verify that there is sufficient room under your credit limit cap on the card to cover the amount required for a security deposit.

Also keep in mind that car rental companies won?t just take any credit card. When you rent a car, you don?t need just any major credit card. You need your major credit card. The person whose name appears on the credit card has to be listed as an authorized driver on the rental agreement and the person has to be present at the time the car is rented. In other words, you can?t borrow your friend?s credit card to use for the security deposit on a rent a car.

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Nick Niesen

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Nick Niesen
Joined: April 29th, 2015
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