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Rental Car Credit Cards: The Weekly Wish

Oct. 16, 2014
7 min read
Rental Car Credit Cards: The Weekly Wish
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Today TPG Contributor Nick Ewen continues his series The Weekly Wish, looking at flaws, shortcomings, and room for improvement in the world of travel and loyalty programs. Today’s wish: that savvy card issuers would release co-branded credit cards for rental car companies.

The bulk of coverage here at TPG is devoted to airline and hotel loyalty programs. We want to provide you with strategies to minimize your out-of-pocket expenditures and maximize your travel experiences, and since flights and rooms are generally the two biggest expenses of a trip, they naturally get more attention. However, one cost of traveling that's often overlooked is rental cars, which can also eat up a sizable portion of your budget depending on how you tend to travel.

While rental cars are ostensibly marketed to many of the same customers as airlines and hotels, and despite the existence of several large (and well known) rental car companies, there's one thing lacking from their product offerings that stands out to me, and today's post tackles that gap head on. This Weekly Wish is for car rental agencies to offer co-branded credit cards. Read on to find out how such cards could benefit customers while padding the bottom line of both rental companies and card issuers.

Car rentals are a huge business, and adding co-branded credit cards would be a great way to engender loyalty. (Image courtesy of Shutterstock)

For starters, it's important to point out that the car rental industry isn't just child's play. A recent report by IBISWorld pegged the U.S. domestic car rental market at $36 billion in revenue, roughly equal to the GDP of the Republic of Yemen. Many travelers rent cars on a regular basis, both for leisure and business alike, and by offering co-branded credit cards, agencies like Hertz and Avis could further cement loyalty among their customers.

Avis First is earned after 12 rentals or 35 days; it could also be included as a benefit on the Avis credit card.

Most car rental agencies offer some type of a loyalty program, where renters can earn rental rewards (including points or miles with their preferred airline or hotel), and TPG Contributor Jason Steele did a great run-down of these programs last year. Co-branded credit cards would be a logical extension of these programs, offering added incentives for regular customers to remain loyal to a single agency. Here are some benefits that I would love to see on these cards:

  • Sign-up Bonus: Since we're talking about credit cards, it's natural to think about what would make a worthy sign-up bonus. A basic card - one with modest benefits, a low spending requirement, and no annual fee - could offer something like a free weekend rental of up to three days after spending $1,000 in the first three months of cardmembership. Assuming an average of $50/day (including taxes & fees), that works out to a very reasonable return of 1.5%. A premium card could offer a similar, but more lucrative bonus.
  • Spending Bonus: I would love to see these cards offer a significant bonus for rentals and other charges made at respective agencies. Cards could also offer bonus points for purchases made with airline, hotel, and retail partners. That would encourage cardholders to use the card not only on car rentals, but elsewhere as well.
  • Automatic Discounts: Each quarter, most car rental companies offers special deals for discounts and bonus points/miles (I like using this site to find them), but these promotions are usually specific to a geographic region, rental duration, and/or car type. Co-branded cardholders could get access to a consistent, standardized discount (let's say 10%) on every single rental, regardless of the location or length of the rental.
  • Threshold Bonus: Many hotel and airline credit cards provide rewards when cardholders hit a certain spending level in a given year. I'd love to see something similar on these cards, such as an automatic upgrade to top tier elite status (like Avis President's Club), free automatic class upgrades, or even another free weekend rental.
  • Anniversary Bonus: Depending on the benefits offered, I think a small-ish annual fee on these cards would be reasonable, something like $39 or $49 (though ideally these fees would be waived for the first year). To encourage cardholders to keep the account open past year one, the card could offer a free day with every account anniversary.
Rental car status with Avis and National is already a benefit of World Elite MasterCards. Co-branded cards could offer similar or better benefits.
  • Automatic Elite Status: Like airlines and hotels, most car rental companies allow you to register for their loyalty program for free (e.g., Avis Preferred, Hertz Gold, or National Emerald Club). After a certain number of rentals or days, you can earn elite status (e.g., Avis First, Hertz Five Star, or National Emerald Club Executive). Some credit cards already provide elite car rental status, but co-branded cards would include automatic status, and could even award top tier status with all of the standard perks, like free upgrades, guaranteed availability, and/or bonus points.
  • Fee waivers: One of the rental charges that irks me most is the daily fee for using a toll payment device (like EZPass in the Northeast or SunPass down in Florida). I just got back from Puerto Rico, and my Budget toll pass charged me $3.50 a day PLUS all tolls charged! Co-branded credit cards could waive these fees for cardholders, along with fees to add a second driver and foreign transaction fees.
Congrats to winner Crystal S. on her win!
Hertz or other rental agencies would make great transfer partners for the transferable points programs.
  • Transferable Points: Many of these car rental companies already have agreements with numerous travel loyalty programs. I would love to see card issuers like Citibank, Chase, or American Express form transfer partnerships with car rental companies like they have with airlines and hotels, enabling cardholders to transfer ThankYou points, Ultimate Rewards points, or Membership Rewards points to car rental programs for free rental days. This would add a huge incentive for potential applicants.
  • Free pick-up: I'm sure many of you have seen the old Enterprise commercials with the tagline, "We'll pick you up." This would be a terrific and somewhat unique service to include with the benefit package of a premium rental car credit card.
  • Agreements with insurance providers & car dealerships: If you've ever been in a wreck or needed to leave your car for multiple days with a dealer/auto body shop, you've probably dealt with a rental car paid for by the insurance company or dealership. It would be great to hold a credit card that had agreements with major auto insurers (Geico, Allstate, Progressive, etc.) and car manufacturers (Toyota, Dodge, Chevrolet, etc.) to make getting a loaner car as hassle-free as possible.
  • Standard priced one-way rentals: If you've ever been in the unenviable position of needing a one-way rental, you know how car rental companies tend to gouge you on the daily rate. By having a car rental company's co-branded credit card, you could be guaranteed the standard rate for one-way rentals, or at least a rate that's less exorbitant.

Some of these benefits are more feasible than others, but in a nutshell, a c0-branded card that implemented even a few of the suggestions above would be a win-win situation. Car rental companies would benefit from cardholders applying for and using their cards, and they also provide an incentive for customers to focus their loyalty on a specific company (rather than shopping around for a better discount or a better points/miles bonus). Meanwhile, cardholders would get enhanced benefits and customer service for renting from their company of choice.

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Would you apply for a co-branded car rental card if they came into existence tomorrow? Please share your thoughts in the comments below!
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Featured image by Congrats to winner Crystal S. on her win!