To Rent or Not

This is not a repo story, but it is directly related to daily car rental. The difference between debit and credit cards. For many Car Rental employees, this is the bane of their existence. Why? Because of the strife that comes from stupid people with their debit cards. 

Background

In car rental, most rental agencies require a renter to provide a Driver's License and a form of payment in order to rent. The Driver's License is obvious - the law in all 50 states requires a driver to be licensed. The preferred form of payment for most rental agencies is a credit card. Some 20 years ago or so, when many banks started issuing check cards with the VISA or Mastercard logo on it, a new problem arose. 

The Reason

The reasons for a car rental agency to use a credit card are numerous:

• :Liquid" funds - when the rental needs to be extended, a credit card can be run again. Cash would simply run out. 
• A person with good credit is far less likely to wreck a rental car. 
• A person with good credit is far less likely to keep a rental too long and wind up owing money. 
• A credit card number can be stored, and the card run for additional charges, should the rental go longer than originally anticipated. (over 75% of rentals went longer than anticipated, from my observations)
• A person with good credit and a credit card is more likely to be stable in residence history, and less likely to convert (steal) the rental car. A person putting down cash has just given you a few hundred dollars in exchange for a $25K+ car. 
• And more... 

The Root of the Problem

A debit card (formerly called a check card) is tied to a bank account. While some bank accounts require a person to have a minimum credit score, not all do, and those that do have lower thresholds. 

• The average checking account in the US has $4000 in it. The average credit line is nearly $10,000 per card. 
• A person with a debit card and no credit card would be lucky to have $200 in their account at any given time. 
• A debit card is no measure of credit, but a person with a debit card and no credit card has a credit score that is under 620 over 90% of the time. 
• People that have a debit card and no credit card are not intelligent enough to understand these things. 

The Problem

So, even though the car rental company explains the difference at every point of contact, and because their card processing computers can tell the difference between a credit card BIN (first six digits, which is used to identify the bank and type of card) and a check card BIN; the people who wish to rent a car and have a debit card but no credit card simply do not possess the intelligence to understand any of these things. And because of that same lack of intelligence, they are not good candidates for renting, as they will certainly not take care of the rented vehicle; nor would they keep the terms of the rental agreement and pay the agreed amount. 

The Solution

The solution is self-evident. This requirement is a good tool to weed out people who really do not need to rent a car. And if a person follows advice like that of Dave Ramsey, and has no credit cards - it is an indicator of a complete lack of self control. And that, too, is a sign that the person is not a good candidate to rent a car.