Renting Cars with Credit Cards

BY Beth Williams

Many travelers prefer to pay for rental cars with credit cards. In fact, if you don’t have a major credit card, you may find that some car rental companies will not rent you a car, or will require a large cash deposit to cover any potential damage.

Are you covered? You may even save money when you rent a car using a credit card, since some credit card issuers offer free protection in case of accident, loss or damage to the car. This protection, often referred to as collision damage waiver (CDW), is not usually insurance, but is an agreement under which you won’t be liable for the loss or damage as long as you comply with certain conditions. Some credit cards offer primary protection, which pays for damage or loss without requiring you to first file a claim with your personal auto insurance coverage. Others may provide secondary protection, which covers any damage or loss left unpaid after you have made a claim to your auto insurance company.

Many auto rental companies sell CDW protection for fees at daily rates which can add up depending on the duration of your rental. If you have adequate protection through your credit card issuer and/or under your own auto insurance policy, you may not need to purchase the rental company’s CDW unless the country you are driving in requires you to do so. If you do not purchase the rental company’s CDW, be sure you clearly decline it when you sign the rental contract.

Ask your credit card issuer before you travel if it provides CDW, if it applies in the countries where you will be driving, exactly what is covered (for instance, personal injury or personal property may not be included), what restrictions and limitations may apply, and how the claims procedure works.

Check with your travel agent or the rental company before you travel to make sure you can use your credit card CDW. Not all rental companies accept credit card CDW, and in some countries, such as New Zealand and Italy, as of this writing, customers are required to purchase the rental company’s CDW, even if their credit card offers coverage.

If you violate the car rental agreement, the CDW may not cover you. For example, if you have an accident in a country in which your car rental agreement prohibits you from driving.

Some additional tips for renting cars overseas: Ask your travel agent before you leave if you will need and international driver’s permit to drive in the countries you’re visiting.

When you rent a car, the rental company may place a “hold” on your credit card for anticipated charges, plus incidentals. The amount of the hold is “frozen,” which means you’ll have less credit available for other purchases. Ask the clerk how much the hold will be and when it will be removed. To avoid tying up your credit line, you may want to use one credit card for car rentals and hotels, and another for daily purchases. This may be less of a problem with cards that do not have credit limits.

If you purchase pre-paid vouchers for car rentals, keep copies of them for your records, ask for confirmation from the travel agency that the rental company was paid for the voucher, and ask for a receipt from the clerk when you present the voucher. Keep in mind that these vouchers may not cover all charges (taxes, re-fueling, or CDW, for example), or may not cover additional fees if you change your reservations (such as the location or date of pick-up).

Report any problems with the car to the rental agency immediately and keep a record of who you spoke with. It’s best to try to resolve any problems on-site before you leave. If you wait until you return to the U.S., you may find it difficult or impossible to resolve the problem to your satisfaction.

Try to report any accidents or damages to the car rental company and your credit card issuer (if you’re using the credit card CDW) within 24 hours. Take pictures of the damage, if possible.

If your plans change and you want to keep the car for a shorter or longer period of time than you had agreed, get details in writing about extra charges such as mileage, daily charges, or drop-off fees

Avoid dropping off your car at the last minute. Return it early enough to allow time for inspection and to resolve any billing problems or questions. If you drop off the car and fail to get an inspection, it may be difficult to prove what damage is yours, and what occurred after you dropped off the car.


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