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Can I use a prepaid card to hire a car?

Published on in Multi - Question and Answers by

Can I use a prepaid credit card for hiring any vehicle?

So, you have got your new prepaid card, you set off for the sun, but then find you get declined at the airport when trying to hire your car. You have plenty of money available, so what’s wrong?

If you plan to use your prepaid card to hire a car whilst on holiday, or even within the UK, you need to proceed with care!

Many UK prepaid card issuers have “transaction usage restrictions” outlined within their terms and conditions. Admittedly, these are intended to protect both the card issuer, and customer, however, if you are unaware, it could result in your card being declined whilst trying to hire a car.

This is all caused as a result of the way in which car hire organisations operate. When you hire a car, an initial authorisation is made on your card. This “holds” or reserves funds within your prepaid account, and deducts your available credit so you can’t spend those funds.

Once you return the hire car, your prepaid account is billed with the agreed hire amount, plus any additional fees. For example, if you have damaged the car, or it requires fuel, or perhaps you even extended the hire for a few extra days, additional fees may be incurred, depending on your hire agreement.

The car hire company will charge these fees to your prepaid card, even if this results in the prepaid card going overdrawn.

Clearly this causes problems, as the prepaid card issuer is not protected in this scenario, and is unable to chargeback the transaction to the hire company. Therefore, if the card issuer is unable to retrieve any additional fees from their customer, they are unable to recover the funds and take the financial loss. Exactly the same situation occurs on a credit card, however, generally any additional charges still fall within a customers agreed credit limit.

So, based on the above, prepaid issuers generally restrict and do not allow a card to be used for car hire.

At the point of writing this article, only two known prepaid card issuer allows their card to be used for car hire. The Cashplus MasterCard and Sterling Card. However, it’s initially disabled, and customers must contact the Cashplus or Sterling card Customer Services department to request that the car hire block be removed.

Even then, the request to remove the block may be declined, as a period of “good account behaviour” must have been demonstrated before they will allow their customer to make car hire transactions.

We hope you found this answer useful. If you have any comments, or further questions, drop us an e-mail at what-prepaid-card.co.uk, and we will do our best to help you.

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