Q: Hello, sir. I need a rental car to visit my grandson for his birthday. I have had a debit card for seven years. Can I use it to rent a car? Thank you.
–Gregory Hawker, Crawfordville, Fla.
A: The answer is yes, you can use a debit card to rent a car, but whether that is a good idea is a whole other issue. Generally I don't recommend using a debit card to rent a car if you can avoid it, because doing so carries certain pitfalls.
For example, when you first pick up your rental car, the company needs either a credit card (or a debit card branded with VISA or MasterCard) to process a "holding fee" of several hundred dollars. This is basically your security deposit. If you bring the car back intact, the company cancels the transaction. But if you steal or damage the car, they process the charge.
The problem here is that if you use your debit card for this transaction, lots of cold hard cash in your bank account is made unavailable until the company releases the hold, which could take up to two weeks! Now I don't know about you, but I don't want some company tying up $300 worth of my money when I need to buy groceries.
Furthermore, if you pay for the rental with your debit card after you drop off the car, you have very little recourse if you want to dispute something after the fact.
For example, if you were to realize the rental company made a mistake on the bill and charged you for a ding that you did not cause, you'd have a hard time getting your money back, because they'd already have it! However, with a credit card, you can call the credit-card company and dispute the charges. You can possibly even get them reversed.
And remember that many banks have daily purchase limits on debit cards. So if the amount you attempt to debit for the car rental is greater than your bank's limit, you may find that you can't use your card next time you go to that grocery store.