Security deposit
Also known as: Rental car deposit · Deposit hold · Authorization hold · Damage deposit
Money or a card authorization held at the start of a rental to cover damage, unpaid charges or a late return, and released when the contract closes clean.
Legal basis
California Civil Code §1950.5
In car rental the deposit is usually an authorization hold on a credit or debit card: the amount is reserved, not charged, and released after return — though the time until the cardholder sees it again depends on the issuer. Rentals to gig drivers and long-term customers often take a cash deposit instead, sized to the contract.
For residential rentals, the law caps it. California, for example, limits security deposits to one month's rent (two months for small individual landlords) and requires the landlord to return it, or itemize deductions, within 21 days after the tenant leaves. Rules differ in every state.
A deposit is a blunt instrument. Set high, it drives away good customers who could pay; set low, it does not cover a vehicle that never comes back — and nobody who plans to keep a $30,000 car is deterred by a $500 hold. Sizing the deposit to the renter's assessed risk, and monitoring the vehicle during the rental, protects more than a uniform number.
Frequently asked questions
Why does a rental car company put a hold on my card?
To guarantee payment for fuel, tolls, damage, late return or other charges. The hold reserves part of your available credit or balance and is released after the car is returned and the contract is closed; how fast it disappears from your statement depends on your card issuer.
How much can a landlord charge for a security deposit?
It depends on the state. California caps it at one month's rent for most landlords, or two months for small individual landlords, and requires return within 21 days after move-out. Other states set different limits or none.