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Do Rental Car Companies Charge Extra for Frequent Flyer Miles?

Frequent Flyer Q&A
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Travelers packing up convertible
Editor's Note: This story was originally published on September 1, 2009. To see the most recent SmarterTravel articles on related topics, please click on any of the following links: Avis, car rental, Dollar, frequent flyer, Frequent Flyer Q&A, Hertz, mileage earning, mileage redemption, Tim Winship.

Dear Tim—

Regarding your recent article on adding miles without flying, I recently rented a car from Dollar and wanted to give the agent my air mileage number to receive points for renting. He said I would have to pay for that as Dollar no longer absorbs the cost. He said that most people do not realize they are charged to receive their miles as it is hidden amongst the charges. Is this correct?

Coral

Dear Coral—

Yes, the agent was absolutely correct—it is now standard practice for rental car companies to collect a fee from customers who opt to earn frequent flyer miles for their rentals.

The agent you spoke with was also correct in pointing out that many travelers are not aware that they are incurring an extra charge to earn miles. While such charges are enumerated in the contract conditions of any rental agreement, most consumers don't take the time to read the fine print. So technically, the rental car companies are legally absolved of any misrepresentation.

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But from an ethical standpoint, the fact that so many renters do not know they're paying extra for their miles—and how much extra they're paying—is proof positive that the rental companies aren't doing enough to make consumers aware of the surcharge. My suspicion is that Hertz, for example, doesn't want to be the first to publicize the charges for fear that Avis and other competitors will remain mum about their own fees, leaving Hertz at a disadvantage. In other words, no one wants to assume the risk of taking the lead in moving toward greater transparency.

Back to the case in point, Dollar charges what they call a frequent flyer surcharge of $0.95 a day to, according to the company's website, "offset a portion of Dollar's annual cost of participation in this frequent flyer program." That may not sound like much, but renters only earn 50 miles per day, so the surcharge amounts to paying 1.9 cents per mile.

That per-mile cost should give you pause. My best estimate is that the average value of a frequent flyer mile is currently around 1.2 cents. So unless you're confident of your ability to squeeze more value from your miles, you're overpaying to earn them when renting a car.

For context, Hertz and Avis—the two largest rental car companies—charge $0.75 per day, up to a maximum of $5.25 per rental, for miles earned in the programs of most of their U.S. airline partners. That's 1.5 cents per mile when earning 50 miles per day. Once again, that's more than the miles are worth to most consumers.

Rental car companies have long viewed frequent flyer miles as a necessary but unwelcome part of their marketing efforts. Charging as much as they do to recoup the costs of those miles is a clear indicator of that ambivalence. Until those surcharges are reduced or eliminated, consumers would do well to just steer clear of frequent flyer miles when renting a car.

 
 
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