I just ran across an interesting article on renting a car with a debit card over at Blueprint for Financial Prosperity. In it, Jim provided a rundown of the debit card policies of the major car rental agencies.
The short answer is that it’s definitely possible to rent a car with a debit card. However, certain agencies won’t allow it for drivers under age 25, and pretty much all of them will place an additional hold on funds in your bank account. The bad news is that these holds can last for up to two weeks (though it’s often less), during which time you can’t access a sizable chunk of your own money.
The best advice here is to use a credit card that offers car rental insurance.