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Avis, Hertz nix debit cards
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April 2, 1997: 12:53 p.m. ET
Car rental companies no longer allow customers to use debit cards
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NEW YORK (CNNfn) -- Debit cards are one of the hottest banking product around. Everywhere you look, another bank is coming out with a card that's honored like a credit card but spends like a check.
While debit cards are taking off in the consumer market, at least two car rental companies are telling their customers not all plastic is created equal.
Hertz and Avis are among the large rental car companies that recently stopped allowing customers to rent cars with a Visa or MasterCard debit card without putting up additional money. Predictably, both the banks that issue the cards and the customers who enjoy their convenience are furious.
Car rental companies are balking at the debit cards because they don't help weed out potentially risky renters in the same manner as credit cards.
To receive a credit card, a customer has to prove they have a satisfactory credit history. However, that's not the case with a debit card. They are usually given to anyone that has a checking account.
A Hertz spokesman told The New York Times debit cards "provide no qualification of creditworthiness." The company said Hertz needs to have a certain level of confidence in a customer before they will turn over a $20,000 vehicle to them.
Customers who rent with only a debit card are now being required to make an application several weeks in advance and put down a substantial deposit, just as someone who rents with cash.
While consumer advocates have historically accused the rental car industry of race and age discrimination and of charging high insurance rates, they say the new debit card rule sounds reasonable.
The credit card companies are split on how they intend to handle the dispute. MasterCard says it will fight the companies to get equal treatment of debit cards while Visa has "reluctantly" agreed to the new rules.
Last year, 1.6 billion transactions were recorded on MasterCard and Visa debit cards, an increase of 95 percent over 1995.
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