Can I Rent a Car With a Prepaid Credit Card?

Credit card use has declined somewhat due to three years of a struggling economy and continued high unemployment. When face with reduced income, it's not surprising that cash strapped consumers stop paying credit card debt when money is tight.

Instead, we use the money we have to pay for the mortgage, keep the utilities on and provide food and clothing for our families. We know credit card debt is unsecured.

We will lose our ability to charge against that account. We will lose the account itself and might be aggressively pursued by the bank for payment.

Secured or prepaid credit cards were once the last resort of consumer who had damaged their credit beyond repair or for those who could not qualify for credit at all.

The high number of credit debt defaults and bankruptcy debt discharges in the past three years has led many to turn to those prepaid credit cards as the only credit alternative available. Some of the most popular prepaid cards for renting a vehicle are:

Mango Mastercard Prepaid Credit Card

The Mastercard logo attached to a Mango prepaid credit card allows you to use this card the same way you would use any credit card with Visa or MasterCard logos.

This card is attractive to consumers due to the low costs involved. If you load $500 each month to the card, there are no monthly fees and because you are spending your own money, interest rates and finance charges don't apply.

Transferring money to fund your Mango Mastercard prepaid credit card is easy. You can do it by mobile phone or directly through your personal bank account. You can even use GreenDot MoneyPaks to fun this prepaid credit card.

Capital One Prepaid Credit Card

Backed by a major credit lender, this card is similar to the Mango prepaid credit card above. Setup and monthly fees of $4.95 are reasonable but the $2. charge for ATM withdrawals is something to consider. Balances can be checked easily online but if you want a paper statement of transactions there is a small fee.

There are other fees for loading cash, making customer service calls, etc and it's wise to add up those fees to see if use of this account is a sound choice for your circumstances and needs.

Greendot Prepaid Credit Cards

An early leader in providing prepaid cards specifically designed for car rentals, Greendot has seen competitors beginning to catch up as the need for prepaid cards has increased in this economy.

Once the lowest cost prepaid card for renting vehicles, Green Dot recently raised their fees from $3 for loading the card and $3 as a monthly management fee to higher fees of $5.95 charged by competing lenders.

Why Use Prepaid Credit Cards

When you rent a car, cash payment is not an option. The car rental agency uses your credit card to guarantee payment at the end of the rental period. It also provides a way for the rental agency to take action should you fail to return the vehicle.

Many consumers today no longer use credit cards. Financial stress has cause them to abandon buying on credit in favor of cash as you go.

Many have gone through foreclosures or bankruptcies that have led to loss of credit card accounts as lender close those credit lines.

Without the use of prepaid cards, some people would have no way to rent a car to provide transportation after an accident or for a car rental for an infrequent trip out of town.

The problem with using a prepaid card lies in the way in which the credit is processed by the rental agency. If you plan to use your prepaid card to rent a car, make sure to call well in advance to ask about the terms of use.

When you present your card to rent a car, the agency usually places a hold on funds in your account which equal the amount you are likely to be charged at the end of the rental.

This is not a problem as long as you understand what is happening. However, if you plan to use your prepaid credit card for car rental and also use the card for other travel expenses, you may be shocked to find much of the money on the card is unavailable for use because it has been placed on hold by the rental agency.

Summary

Finding prepaid credits for car rentals is not difficult. Finding car rental companies that do not place excessive holds on your funds while the car is rented is the challenge.