Debit or Credit Card: Which to Use for Car Rentals

When it comes to paying for services, there isn’t much of a difference between credit cards and debit cards. However, incentives such as reward points and supplementary or main automobile rental insurance clearly favor credit cards.

If you’ve ever rented a vehicle and had to pay an additional charge for collision damage coverage, you know how useful this advantage is. This extra coverage costs an average of $27 per day at car rental providers. 1 Using a credit card, particularly the correct credit card, will fully avoid this fee.

Key Takeaways

• Many credit cards include automobile rental insurance coverage as a default cardholder perk, saving you money on per-day insurance at the rental counter.
• Debit cards, on the other hand, may not always provide the same advantages.
• Check the small print of your specific card first, since each has its own set of criteria and coverage limits.

Which Credit Cards Provide Car Rental Coverage?

Car rental coverage is provided through the credit card network, not the issuing banks. Visa, Mastercard, American Express, and Discover all provide rental vehicle insurance, albeit Mastercard only does so on its World cards. 2

To activate coverage, charge the total automobile rental amount to the credit card you’re using. Then, when you begin a rental, you must refuse the automobile rental company’s collision damage coverage. This refusal is known as a collision damage waiver, or CDW.3

Credit cards provide two forms of automobile rental insurance. All four main credit card companies provide secondary coverage. If you have main coverage via your usual auto insurance provider, the credit card network’s secondary coverage will pay your deductible. 4 However, they usually cover towing and the rental company’s loss of use of the automobile during the repair time.

Before beginning this combination of coverages, check with your main insurance company to ensure that they cover automobile rentals. They usually do, as long as the rental car’s retail value is equal to or less than the retail value of your present vehicle.

The second form of credit card automobile rental coverage is main coverage. This is a fantastic option if you do not have a primary car insurance policy or if your policy does not include collision and comprehensive coverage. 4 Only few cards provide primary coverage.

Coverage Restrictions

There are several restrictions on automobile rental insurance supplied by credit cards. None of the cards, for example, cover high-end automobiles (usually priced at $50,000 or more), full-size vans, classic cars, trucks, or off-road vehicles. American Express only covers a small number of SUV models. 5

Coverage for domestic rentals is normally limited to 15 days and 31 days for international rentals. Roadside help may also be offered for a cost, however this is often supplied by the automobile rental provider.

Credit card companies usually only cover drivers who are also cardholders or authorized users on the credit card account. The coverage will not apply if a motorist is not an authorized user. Each card also includes a time restriction within which you must make a claim or the coverage will expire.

If your credit card and main auto insurance policy do not give you with the amount of coverage you need for your rental car, you have a few choices. For example, you may check into temporary auto insurance, which is a kind of short-term coverage that would protect you for a certain time.

Credit Cards that Offer Primary Car Rental Insurance Coverage

Chase Sapphire Preferred Credit Card For most rental automobiles in the United States and overseas, primary coverage is offered, which covers compensation up to the actual cash worth of the vehicle for theft and accident damage (always check to verify your coverage before renting).6

Other travel benefits offered by Chase Sapphire include 2X points on travel when you use the card to pay for airline, hotels, cruises, rental cars, train tickets, taxis, tolls, and other travel expenditures. They also provide 2X points for eating, which may range from quick food to luxury dining. 7

The American Express brand. American Express cards provide supplementary automobile rental insurance as well as main coverage. You pay a set charge of $12.25 to $24.95 every rental term ($15.25 in Florida and $17.95 in California). That is for the whole rental duration, not per day. The supplied coverage is not subject to a policy deductible. You simply pay when you rent, and coverage is available for up to 42 days. 8

The $24.95 option offers coverage for up to $100,000 in rental car damage or theft, up to $100,000 in accidental death or dismemberment, up to $15,000 per person in secondary medical expenditures, and up to $5,000 in secondary personal property coverage. 9

The coverage is available on any American Express card, but if you want to incorporate a complete range of travel advantages, you may go with the American Express Gold Card. You may earn 25,000 points after spending $2,000 on purchases with your new card during the first three months of membership. Flights booked directly with airlines earn 3X points, petrol stations in the United States earn 2X points, grocery purchases in the United States earn 2X points, and restaurant purchases in the United States earn 2X points (1X points on other purchases).10

Both cards are good deals for regular travelers.

Always Read the Fine Print

This point cannot be overstated. Credit card automobile rental insurance coverage is hard to begin with, but it becomes considerably more confusing when you need to submit a claim and must coordinate with the credit card company, rental car business, and your main insurance provider.

There are several apparently small clauses that might render your coverage null and void. Credit card companies, for example, would often refuse to settle a claim if the automobile rental is utilized for business reasons. There are also certain countries where coverage will not be available (typically Ireland, Italy, Israel, Australia, and New Zealand, but there may be others).

The Bottom Line

If you want to rent a vehicle, double-check your coverage with both your main insurance provider and your credit card company, and you should be OK. This is a wonderful advantage that may be even more useful than rewards points, and it makes using a credit card the obvious decision over a debit card.

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