Do Car Rentals Put Hold Your Credit Card?

When renting a car, there are many avenues to navigate, and one of the most important is understanding how rental companies handle credit card holds. 

In this guide, we’ll steer you through the ins and outs of the typical car rental process and shed light on the all-important aspect of credit card holds. We will cruise through all the important details, from why rental companies require them to how they may impact your credit card balance.

Key Takeaways

• Car rental companies typically put a hold on your credit or debit card when you rent a car.
• The hold covers the security deposit and potential fines or penalties during the rental period.
• The length of the hold may vary depending on the rental company and the rental agreement terms.
• While some car rental companies allow debit cards for holds, it often comes with stricter requirements and can impact the available balance in your account.
• Not having enough funds on your card for the hold can lead to the rental being declined, over-limit fees, and a reduction in your available credit. 

Understanding the credit card holder in car rentals

When preparing to rent a car, it’s important to understand the financial mechanics involved, including a practice known as a ‘credit card hold.’ 

This mechanism, commonly employed by car rental companies, can sometimes be a source of confusion or concern for customers.

So let’s delve into what a credit card hold means in the context of car rentals and why rental companies implement it.

What is a Credit Card Hold?

Simply put, a credit card hold is a temporary authorization that rental companies place on your credit card to secure potential charges that may arise during your car rental period. 

This hold, often equivalent to the amount of the security deposit, ensures the rental company that you have the necessary funds to cover any possible costs.

It’s important to note that while this hold may appear as a pending charge on your card statement, it is not an actual charge.

Why Do Car Rental Companies Use Credit Card Holds?

The rationale behind the credit card hold is to cover any potential liabilities that may arise during your rental period.

These could include but are not limited to, late return fees, additional mileage charges, fuel replacement, or damage to the vehicle.

By placing a hold, the rental company essentially “reserves” a certain amount on your card as insurance against these potential costs. 

This practice is a standard part of risk management in the car rental industry. It assures the rental company they will not be left out of pocket should any unexpected expenses emerge.

It’s also a protective measure for you, the renter, as it transparently communicates the maximum potential costs you could incur, helping you to budget effectively for your rental.

Hold vs. Charge

A key distinction is between a credit card hold and an actual charge. While they might initially appear similar, especially when you view your credit card statement, they are fundamentally different.

An actual charge on your card implies that the transaction has been completed and the funds have been permanently transferred from your account to the car rental company.

Charges generally cover the agreed-upon rental costs, such as the daily rental rate, taxes, and any additional services you’ve opted for.

Conversely, a credit card hold is merely a temporary block or reservation on a portion of your credit limit. The funds on hold are still yours and have not been transferred to the rental company. 

Instead, they are “frozen” on your account for the duration of the hold period. Once the hold is released, typically after you return the rental car and settle any outstanding costs, these funds become available again.

The Purpose of a Credit Card Hold

In car rentals, the credit card holder is a standard practice implemented to safeguard the interests of both the rental company and the customer. By delving deeper into its purpose and what it covers, we can better appreciate its role in the car rental process.

Risk Management for Rental Companies

The primary purpose of a credit card hold is to act as a form of risk management for the rental company.

Operating a fleet of vehicles for public use carries inherent risks. Damage to vehicles, late return fees, and additional mileage charges are just a few examples of unexpected costs that could arise during the rental period.

A credit card hold serves as a financial buffer for the rental company, ensuring they can recoup potential losses without chasing the customer for payment.

In addition, it assures that the renter has sufficient funds to cover any potential liabilities, thus protecting the company’s financial interests.

Potential Liabilities Covered by the Hold

The hold is typically equivalent to the security deposit and is designed to cover any fines, penalties, or additional charges that may occur during the rental period. These could include:

Damage to the vehicle: 

If the vehicle suffers any damage during the rental period that is not covered by insurance, the cost of repairs will be deducted from the hold amount.

Fuel Replacement: 

Most rental companies require you to return the vehicle with a full fuel tank. If you return it with less fuel than at the start of the rental, the company will use the hold to cover the cost of fuel replacement.

Additional Mileage Charges: 

If your rental agreement includes a mileage limit and you exceed this limit, you will be liable for additional mileage charges. The hold would cover these.

Late Return Fees: 

Returning the vehicle later than agreed upon in the contract would typically result in late return fees. The hold would cover these costs.

Length of the Credit Card Hold

When renting a car, customers often wonder how long the rental company will hold funds on their credit card. While it’s a common practice, the duration of this hold can vary greatly depending on several factors.

Typical Hold Duration

Generally, a rental company will place a hold on your credit card for the duration of the rental period. This means the hold remains in place from picking up the vehicle until you return it.

However, the time to release the hold once the car is returned can vary. It can be as quick as a few hours or several days, depending on the rental company’s policies and the credit card company’s procedures.

Managing the Hold Effectively

While the hold is in place, the reserved amount will reduce your available credit limit. Therefore, ensuring you have enough credit limit to accommodate this hold and your other expenses is important. 

Remember, exceeding your credit limit could lead to additional fees from your credit card company or even a decline in your credit score.

Using a Debit Card for Car Rental Hold

Can you use a debit card instead of a credit card when renting a car? The answer largely depends on the car rental company’s policies.

While most car rental companies prefer credit cards, some allow debit cards for holds. However, this typically comes with stricter requirements.

Debit Card Policies Vary

Each rental company has its own policy regarding debit card usage. For example, some may require additional identification, a credit check, or proof of travel plans, such as a return airline ticket.

Furthermore, debit card users may be restricted to certain categories of vehicles.

The Impact of Debit Card Holds

It’s important to note that when a hold is placed on a debit card, it can impact the available balance in the connected bank account. This means that other checks or payments drawn on this account could bounce if insufficient funds are due to the hold.

Therefore, ensuring enough funds are in the account to cover the hold and any other potential expenses is crucial.

Conclusion

Renting a car often comes with a set of financial considerations that extend beyond the rental fee itself.

A credit card hold is one of these key aspects that renters should be aware of.

In addition, understanding the policies and procedures related to credit card holds can help ensure a smooth and trouble-free rental experience. 

Frequently Asked Questions