After booking my trip to Hawaii the other day, I started thinking about the last time BF and I were in Hawaii.  I remember we rented a car, a GPS, and paid for car rental insurance.  What started off really cheap (free day of rental car with the Go Oahu Card) ended adding up to $50 a day.  Good thing we rented it for only one day. I definitely won’t be doing that again this time (buying car rental insurance, I mean).

How did this happen?

Well, the GPS cost $11.99 per day (she was invaluable- I think a lot more arguments would have cropped up were it not for the GPS telling us where to go.  I must admit I’m not a very good navigator.

The car rental insurance cost us $30 a day.  We really thought car rental insurance would be crucial because the last thing  you want is to have your trip ruined by a motor vehicle accident.  Even a little dent could cost us hundreds of dollars to pay back to the car rental company.

Contrary to popular belief, car rental insurance isn’t actually insurance. It is the coverage of the deductible should the car rental be in a collision causing damage.

Then one day as I was reading my credit card agreement for fun (yes, sadly, reading credit card agreements are my form of entertainment), I came across some of the “perks” of my MBNA Platinum Plus credit card.  One of them was that car rental insurance was included, provided that you pay for the car rental (or portion of it) with the credit card.  Namely this was labeled as “Supplemental Auto Rental Collision Damage“.  It isn’t insurance, but it helps eliminate the high deductible that you would have to pay should the rental car be in an accident causing damage.

One has to keep in mind that if you say “yes” to the car rental company’s deductible coverage and PAY the $20-$30 a day extra, you say “adios” to any extra coverage that your credit card company might offer.  So it’s either one or the other, not both.

Therefore, it is probably a better idea to save yourself the $30/day and pay for your car rental with your credit card.  The rental car company might ask to keep your credit card on file/with them in their office so that they can use it should you damage the vehicle.  It’s best to bring two credit cards on your trip (I’ve learned this the hard way on my travels- got a call from the Mastercard company one time in South America to notify me that my credit card seemed to be compromised and they will mail me one at home in a few weeks).

If you end up in an accident, the rental car company could charge your card.  You will then need to contact your credit card company (and although it is a laborious and annoying process- it’s worth it to save your money) to submit documents etc. in order to get your claim approved.

Best to check with your credit card company to see how much the coverage is for your rental car before you rent the car.  Usually this extra coverage from the credit card company is with “platinum” cards, “gold” cards etc., so don’t expect the credit card you got approved for while you were a student to give you this perk.  Peace of mind when it comes to traveling is a good thing.

After talking to some of my friends who often rent cars, they were aware that rental car insurance is a “scam” and that most credit card companies can help you out.

Did you know about this?  Was I living under a rock again? At least I know now- I won’t be buying any car rental coverage this time around in Hawaii (but will check with the credit card company first before I go).  I know that credit cards can be a dual edged sword, but I think that if you pay them off with discipline and don’t carry a balance, they can be a great personal finance tool to have.

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