Credit Cards

What is the Best Credit Card for Rental Cars

What is the Best Credit Card for Rental Cars 05.09.2019Leave a comment
What is the Best Credit Card for Rental cars

If you are planning to rent a car, there can be many ways to save on them by choosing the best credit cards. When you rent a car, you either have to have your auto insurance policy or purchase one from the car rental agency. If you find the right credit card, you may be able to avoid additional charges on the insurance of your car and receive many other benefits.

For US residents, credit cards are more likely to provide secondary car insurance that only works after you have made a claim through your personal auto insurance. Not only these credit cards offer rental car insurance coverages they are also providing other benefits such as traveling bonuses, cash-backs, and rewards.

We will talk about the functioning of primary and secondary insurance coverage later in the article.

Why is paying with a credit card more preferable for the agencies?

Car rental agencies prefer credit cards over cash and even debit cards for numerous reasons, and here are some of them. First of all, paying with credit card mitigates their risks of vehicle damage and your inability to pay. It means you will be able to pay for the rental as well as any costs related to the repair of a vehicle.

Another reason is that you have already been monitored before approval of the credit card application. It means, the financial institution already trusted you with credit, which, in its turn, ensures your good credit score and trustworthiness. Last but not least is that the rental agency will have fewer difficulties for recovering funds from you in case if you decide to return the vehicle.

The rental agency may put a hold on your card, and if you’d like to unhold it, you will need to return the car. In case of a debit card, the agency may have difficulties recovering funds from you. However, in the case of credit card purchase, they are more likely to track you down and get their money back.

Credit cards usually offer added benefits and protections when renting a car. Here are some of the advantages you may get.

The process of renting a vehicle certainly requires a lot of procedures to undertake, one of which is the payment method. The rental agency will need your credit score and monitoring records before approving your application.

In case of credit cards, they assume financial institution which accepts your credit card application has already monitored your credit history and came to a definite conclusion.

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It is crucial for the rental agency since they view your car rental as additional cash flow, which you may not be able to pay off.

You can earn cash-back or travel rewards when paying your car rental with credit cards. Most of the credit cards which you will be presented offer bonus and reward systems for your traveling expenses, dinners, and for rental car purchases.

All in all, the reward systems provide incentives to the customers to use credit cards when renting a car.

The rent of your car may require a considerable amount of money, so in many cases, rental agencies do not accept debit cards. That’s because many credit cards offer additional services or fraud protections that debit cards do not. In case of a debit card fraud, it is way more costly and time-consuming to recover your funds. You can more easily dispute a charge for a credit card rather than for a debit. This is also one of the main reasons rental agencies prefer to get paid by credit cards. 

Rental car insurance coverages offered by credit cards come in two forms; primary and secondary. These are basically the main benefits you can get from renting a car with a credit card. Many of the offered cards have primary and/or secondary car insurances. Now let’s see what the differences between these two insurance plans are. 

If the credit card you choose offers primary coverage of your car insurance, this means the company’s insurance is responsible for any of the damages and should cover those. It means you don’t need to file a separate claim with your auto insurance company. According to Business Insider, primary rental insurance is the golden standard of car rental benefits. This way, you are better off as in case of any damage the credit card company will cover your expenses without you filing anything through personal auto policy. If you think about it, in the long run, it could save you a significant amount of money on both Collision Damage Waiver and Loss Damage Waiver. The credit cards which offer primary coverage on your car insurance are Chase Sapphire Preferred Card, United Explorer Card and many more of which you will get to know later in the article. By using these cards, you can save significantly in the long run. You will also avoid the rising costs of your auto insurance company, since each time your car gets damaged the premiums of auto insurance policy rise.

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Unlike primary coverage, this type requires you to file a claim with your auto insurance company. Most of the credit cards offering secondary car rental insurance allow you to decline the Collision Damage Waiver (CDW) and Loss Damage Waiver (LDW), which will save you about $10-$35. On the other hand, unlike primary car rental insurance, this type offers very limited terms. In case of damage or theft, the person who rents the car needs to file everything through their auto insurance company, however, the secondary insurance will be covering only a small portion of costs.

Note that neither of these insurance coverages includes liability insurance. Most of the credit card coverages have a list of exclusions, such as lost keys, mirror and roof damage, long-term rentals, etc.

This means, if you are at a fault of the damage of vehicle (i.e., an accident where you are at fault, intentional damage, etc.) the credit card company is NOT LIABLE for covering up your expenses. So, make sure you are comfortable with the terms of the offered insurance package.

Chase Sapphire Reserve

By applying to Chase Sapphire Reserve, you will be given primary insurance coverage for all rental cars around the world. This card provides advantages both in terms of car rental and travel. This card also has the advantage of not having a foreign transaction fee.

Chase Sapphire Reserve
Chase Sapphire Reserve

Moreover, for the first three months, if you spend $4,000 on a purchase, you will earn 50,000 bonus points, which is worth $750. You may think about whether this card fits you or not.

Here is the review of creditkarma.com regarding who is this card good for? First of all, people who continuously travel may enjoy the perks of Chase Sapphire Reserve. You should take into consideration that by paying a $450 annual fee, you will end up saving a lot more than spending.

From the reward and bonus perspective, you will have $300 travel credit to pay for car rental. After spending $300, you will earn 3 points on each $1 of travel purchase you make.

Chase Sapphire Preferred

By using this card, you can earn 60,000 bonus points after spending $4,000 throughout three months, starting from the account opening. The annual fee of this card is less than on Chase Sapphire Reserve.

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Chase Sapphire Preferred
Chase Sapphire Preferred

The payment you are charged annually is $95. Chase Sapphire Preferred also has a primary car rental insurance, from which you can benefit. The coverage works this way; it provides compensation for damage or theft of your vehicle without you filling up a claim to your insurance.

Note that the cards which do not offer primary insurance coverage require you first to file a claim with the auto insurance company.

United Explorer Card

If you travel a lot, United Explorer Card is just what you need. It offers 40,000 bonus points when you spend $2,000 in the first three months. Additionally, you are not required to pay an annual fee in the first year.

United Explorer Card
United Explorer Card

After the first year, you are charged $95. It also offers benefits of earning 2 miles per $1 spent on United purchases at restaurants and/or hotel stays.

United Explorer Card also has the advantage of primary car rental insurance, meaning the company is liable for any losses without you filing with the personal auto insurance company.

Ink Business Preferred Credit Card

Among Chase cards, Ink Business Preferred has one of the highest sign-up bonuses. When you spend $5,000 in the first three months of opening your account, you will earn 80,000 bonus points.

However, the difference in this type of credit card is that you need to use your car for business purposes.

Ink Business Preferred Credit Card
Ink Business Preferred Credit Card

Chase Ink Business Preferred offers primary car rental coverage. It has no annual fee, so you should note that these type of deals are extremely rare in the market.

Basically, you are getting a free card plus a primary car rental coverage; the only requirement is that your car needs to be used for business purposes.

Chase Freedom

This card may be the best option if you are renting a car on a budget. It does not have an annual fee, which makes it an affordable option. The Chase Freedom is also an advantageous card if you do not have a car insurance.

Chase Freedom
Chase Freedom

The card offers secondary coverage for your rental car. Note that this mean, you firstly need to file the claims with your personal auto insurance company then see what the credit card company may cover additionally.

By using Chase Freedom card, you are also given the opportunity to have 0% introductory annual percentage yield in the first 15 months after the balance is opened.

Citi Prestige Credit Card

Within three months of opening your account and spending $4,000, you can earn 50,000 bonus points, which are redeemable for $500 in travel anytime by ThankYou Travel Center. The annual fee of this card is $495; however, as its primary target audience are travelers, there is no foreign transaction fee.

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Citi Prestige Credit Card
Citi Prestige Credit Card

You will also receive priority pass in many different airports around the world. Citi Prestige Credit card offers you primary rental car coverage, thus covering the costs of repairs and the losses in case of theft. Coverage is available worldwide. However, some countries and specific car rental agencies may require a letter of coverage.

The maximum amount of coverage for your rental car is $50,000 and covers damages caused by car accidents, natural disasters, and vandalism.

Blue Cash Preferred card

All of the American Express cards offer rental car benefits. The Blue Cash Preferred card has an annual fee of $95. Moreover, when you spend $1,000 in the first three months of the card membership, you get $300 back.

Blue Cash Preferred card
Blue Cash Preferred card

The card also offers benefits for the ones who like traveling a lot. You can use your American Express Blue Cash Preferred card to pay for your trip and get travel insurance coverage up to $250,000.

Notes for you to make the most of your credit card car rental insurance

All of the credit cards mentioned above have specific requirements for you to follow.

  1. You should pay for the rent of your car entirely with the credit card to use all of its benefits (you cannot split the payment into different cards)
  2. You must be listed as the primary driver and owner of the vehicle
  3. You should decline the rental car company collision coverage to provide credit card company an opportunity to cover those on their own.

Now that we have talked of the credit cards offering car rental benefits, here are some notes for you to consider using the advantages accurately. Let’s talk about the above-discussed issues in detail. First of all, pay for your car rental in full with the credit card offering the benefits mentioned above.

If you split the payment and pay it with 2 different cards, there is a chance that your insurance will not be fully covered. You should always review the terms and conditions before using the credit card. In this case, you may need additional liability insurance coverage. For the primary or secondary insurance, if you got into a car accident, the credit card company does not cover the damage of the third party.

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So, before using your credit card, make sure you are aware of the terms and offers that it has. If you are applying for a credit card note that the vehicle should also be under your ownership or else, you won’t be able to use the benefits.

Wrapping up

If you travel a lot, you certainly have a lot of expenses during your trip, such as transportation costs, dining, car rentals.

You will be able to decrease your costs with the right tips we suggest. If you rent a car with the right credit card, you may be able to save a lot of money. Credit cards which offer car rental advantages usually offer traveling, dining, and other bonuses as well.

The majority of credit cards have bonuses, rewards, or sales on travel expenses, restaurants, and rental insurance. The advantages offered are applicable worldwide with some exceptions where you need to file a claim through your auto insurance company.

Note that most of the credit cards you apply from the list as mentioned above are offering primary or secondary insurance coverage. In the case of car accidents, there are many situations where you are liable for damages caused to the other side.

Make sure you choose the most effective credit card when you are about to rent a car. Most of the suggested credit cards you can benefit from cover your rental car insurances by offering either primary or secondary coverage, earn bonus points, and match your spending habits.

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Andrei Shilkov

Blog author. I am well versed in Finance and Digital Marketing. I have two bachelors degrees in Finance. Born in Russia, but later moved to the USA, to western Pennsylvania, the city of Pittsburgh. I have a Certified Public Finance Officer (CPFO) certificate. I also worked at IRS and Microsoft.

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