Can You Rent a Car With a Secured Credit Card?

How to Rent a Car With a Secured Credit Card

You can typically rent a car with a secured credit card in much the same way you can use an unsecured card. But before heading to the rental agency, it’s a good idea to check your available credit to make sure there’s enough funds to cover the cost of the rental, including fees and the authorization hold.

Rental companies commonly initiate authorization holds on credit cards—whether secured or unsecured—to act as a security deposit. The company will charge your card for the rental amount, plus an additional charge to cover potential damage to the vehicle. Then, when you return the vehicle, the car rental company will release the additional charge, which could take up to two weeks to credit to your account.

The minimum credit card hold amounts for some of the most popular car rental outfits as of the time of publication are as follows:

• Avis: Car rental amount plus $250 minimum hold
• Budget: Total estimated rental charges plus the greater of 25% or $200; deposit amounts vary by location
• Enterprise Rent-a-Car: Varies by location
• Hertz: Estimated car rental charges plus up to $200 credit card authorization hold; the amount of the hold depends on the specifics of the rental.
• Thrifty Car Rental: Estimated rental charges plus a $200 authorized hold in the U.S. or $350 in Canada

Does Renting a Car Hurt Your Credit?

Renting a car shouldn’t hurt your credit unless the rental company runs your credit or you don’t pay the bill and it gets sent to collections.

One benefit of using a credit card for a car rental is that rental companies generally won’t run a credit check when you pay with one. By contrast, you’ll likely face a credit check if you rent a car using a debit card, potentially resulting in a hard inquiry on your credit report. Hard inquiries can cause your score to drop temporarily, typically by no more than five points. Before handing over your debit card, verify if the company will run a hard or soft inquiry on your credit.

Of course, your credit could be harmed if you don’t pay the entire bill and it gets sent to a debt collection agency. For example, if you return the vehicle late or incur additional fees that exceed the authorization fee, you’d be on the hook for those charges. If you don’t pay the entire bill, the rental company could pursue collections, which could have a significant negative impact on your score. Remember, accounts in collections have the potential to drag down your credit score for up to seven years.

Secured Credit Cards Can Help Build Your Credit

While secured credit cards require you to provide a security deposit that usually establishes your spending limit, they can be used to cover many of the same transactions as unsecured credit cards, including renting a car. Still, unsecured cards come in many flavors and can provide various rewards and benefits that could come in handy. For example, a traditional card may offer rental insurance coverage, potentially saving you money in insurance costs at the rental counter.

Secured credit cards are also an excellent option if you’re looking to build or rebuild your credit and ultimately upgrade to an unsecured credit card or other forms of credit. Making consistent on-time payments and paying down debts can also positively impact your credit score, as payment history and the amount you owe are two of the most important credit score factors.

While you’re taking steps to improve your credit, you might consider signing up for free credit monitoring from Experian. You’ll be able to monitor your progress and receive alerts about new inquiries and changes to your credit.