Question about dept store experience (bad credit, loans, insurance)

[rlrl]

I was just shopping in a dept store in Kingsbridge/Marble hill and after i paid with a visa debit card the register girl claimed that my name popped up in the computer to take a survey that could get me a $5000 in free shopping at that store. She also claimed that only those with a certain good credit rating were flagged for this. What seemed odd to me is that I just finished a chapter 13 bankruptcy last year and my credit FICO's are just slightly under the score needed to get the top rates on loans, etc(ie not phenomenally good but not certainly not bad)

A whole bunch of store staff came over and one staff took me up to the store computers to enter in the survey. But when the computers were occupied by other customers, the staff told me to just go home and do the survey online. This is something i always do anyway, complete the surveys online at home to win things, so i figured this was some type of store hype to make other customers think others were winning something

Which brings to mind something about credit. Recently i went to rent a car on a debit card. The rental agency told me they do a credit check even if renting on a debit card.

My question is, why do they do a credit check if you're essentially paying for the rental in cash via debit card and even if one had bad credit and used a credit card, all that would matter is that the renter had an adequate credit line for the rental?

Does the credit rating of the renter pop up when a debit card is entered? Or is their 'credit check" really a check to see if you're a bad driver with a bad driving record?

[UpstaterInBklyn]

My question is, why do they do a credit check if you're essentially paying for the rental in cash via debit card and even if one had bad credit and used a credit card, all that would matter is that the renter had an adequate credit line for the rental?

This probably has to do with the "pre-authorization" transaction that some merchants do. I know this is the case with hotels and probably rental car companies as well.

Most consumers don't know this, but when you check into a hotel and hand them your credit card, they run an "authorization only" transaction on your card. The card isn't charged yet - and the transaction does not appear on your statement, but they will pre-authorize the total cost of your stay PLUS $100-$150 a day for "incidental" expenses. This kind of transaction encumbers the funds in your account and guarantees that they have the ability to receive that amount of money when you check out. When you check out, the transaction is converted into a "sale" for a actual amount due.

I suspect that car rental companies probably do this as well, because they are concerned about covering incidentals like damage fees, insurance deductibles, unfilled gas tanks, etc.

If you are using a debit card linked to your checking account, and you only have a few hundred in your account, they probably can't pre-authorize enough money (or maybe they are not allowed to by law with debit cards).

I don't know what kind of "credit check" they can do on you at that time, and how that would help them, except to provide a level of confidence that you will pay any extra fees due.

When you do a debit card transaction with a PIN, as opposed to a credit card transaction with a signature, these are wholly different transactions that are handled by different processing networks and covered by different laws. PIN-based debit card transactions are essentially the same as cash, while credit-card transactions (even those from debit cards) are processed differently and are covered under a different set of consumer protection laws. That is why cashiers always ask "debit or credit?", when you hand them a debit card for a transaction.

My advice would be to always use a credit card for these types of transactions. You can always switch back to a debit card when you settle the transaction at the end.

Irrelevant side note: Most merchants prefer to process transactions as debit because they don't pay fees and receive the money immediately. Merchants pay fees of 2% to 3.5% on credit card transactions, plus there is usually a 2-4 day waiting period for the money to actually be deposited in the merchant's account. This is why they ask and why sometimes the digital signature keypad devices in stores make you press "cancel" or jump through some other hoop to process the transaction as "credit".

[LookingtoLeave]

I have never heard of this happening. An actual credit report can't be run w/o you authorization, but like the above poster said, a 'pre-authorization' is a different story. Not only that, when you use a debit card that's tied to your checking account, this does not earn you credit nor does it go on your credit report. I worked for Citi for 6 yrs. and I can't tell you how many people still thought it was an actual credit card solely b/c it has the MasterCard logo and they thought they had this open line of credit, but that is obviously not the case.

[rlrl]

Most consumers don't know this, but when you check into a hotel and hand them your credit card, they run an "authorization only" transaction on your card. The card isn't charged yet - and the transaction does not appear on your statement, but they will pre-authorize the total cost of your stay PLUS $100-$150 a day for "incidental" expenses. This kind of transaction encumbers the funds in your account and guarantees that they have the ability to receive that amount of money when you check out. When you check out, the transaction is converted into a "sale" for a actual amount due

**you know it, all hotel's i've checked into always seem to get more on my card than the actual cost of the sale

you know what else is odd, thwn the rental company charged my card when i took the car, the balance in my checking acct was reduced, but the next day when i chacked my balance it seemed like it was redeposited back into my account. very strange indeed

why do they do this, and btw, thanks for the detailed response!