Car hire credit card charges: A nasty post-holiday surprise

By Emma Lunn

With the holiday season almost upon us, travellers need to keep a close eye on their credit card bill if a hired car is in their plans.

Whenever you hire a car, you are normally asked to provide your credit card details as security. If there is a problem after you return the car, the hire company can then recover their costs from your card. The charges could compensate the company for things such as late return, damage that's not covered by insurance or fuel charges.

However, according to a 2011 report from the Office of Fair Trading, many travellers don't realize that the lengthy paperwork they signed may give the car hire firm permission to charge their cards without advance notification for damages. So, they return their cars in what they think is good condition and then are shocked their credit card statement contains charges for damages they were not aware of.

The charges can run into thousands of pounds and often pit the car hire company's word against the customer's about whether the car was actually damaged during the hire period, according to the UK European Consumer Centre. In 2010, the Centre measured a 30% jump in complaints about car hire firms between the beginning of 2009 and the beginning of 2010. car-hire-charges

Here are some things to watch out for when you hire a car -- and how you can avoid charges for damage.

Insurance doesn't cover everything
Buying the car hire firm's insurance may seem like a foolproof way to avoid unexpected damage charges later. Yet although car hire firms will sell you basic insurance with your hire, the small print may reveal that damage to some parts of the car isn't covered by the hire company's policy. Commonly excluded areas include the windscreen, tyres, roof and undercarriage, according to consumer advocacy group Which?.

So, if these parts of the car are damaged, you may see your card billed for repairs. Moreover, these policies generally do not cover the first £500 to £1,000 in damages (called the "excess"), which could leave you with a huge bill after a crash.

To avoid paying the excess, you can buy "excess waiver" insurance offered by most car hire companies. However, the excess coverage you're offered at the counter may not be the best deal. According to Which?, car hire companies will generally charge you between £10 and £12 for insurance per day for a compact car. You may be able to save money by planning in advance -- and purchasing excess coverage from a stand-alone car hire insurance company for far less, according to Which?. In many cases, coverage from stand-alone companies may also be more customisable, available for longer periods and applicable to additional drivers.

How to fight back
So what if the insurance you bought wasn't enough? Or if you decided to go without? If you return home and your credit card is billed for damages you think are not your fault, the first thing you should do is contact the car hire company. It should be able to provide evidence of the cost of any repairs.

If it can't provide evidence, but still refuses to refund your money or you don't agree that the damage occurred while you were responsible for the car, then you may have to raise the issue with your credit card provider and ask it to initiate a "chargeback."

Chargeback is a process that allows you ask your card provider to reverse a card transaction if there is a problem with goods you charged on the card or the transaction is unauthorised. Whether the chargeback is successful will hinge on the evidence the car hire company provides to the card issuer upon request. If it can prove the damage happened when the car was in your possession, you're out of luck.

"If the merchant is not able to prove the transaction is valid, the refund would be made to the customer," says Jonathan Akerman, spokesman for Santander. "But if the merchant can prove any charges were valid, then we cannot assist further and the customer would need to refer to the merchant to resolve the dispute."

Even with the possibility of a chargeback, attempting to get your money back after the car hire company charges your credit card will be frustrating and possibly fruitless. So the best course of action is to prevent spurious charges in the first place.

First, inspect your car at pick-up and asking an employee to inspect it with you. Make sure any existing damage is documented. Your vigilance should not end after pick-up; once you drive the car off the lot, you are responsible for it until it's inspected and checked in by the hire company, according to the British Vehicle Rental and Leasing Association (BVRLA). So try to drop off your car during the firm's operating hours -- and get it inspected for damage and signed off by a member of the car hire company staff.

If you have a dispute with a British car hire firm and it's a member of the BVRLA, you can use the association's conciliation service. However, it cannot help in disputes with firms outside the UK.

See related: Credit card travel insurance could protect you from holiday nightmares

Published: 19 April 2013