Debit cards work great if handled correctly. They offer easy access to money in your account without the worry of long-term payments. Keep track of account balance and a keen sense of how much is being spent to avoid any fees associated with debit cards. Bank overdraft fees are pricey. Their convenient status have them filtering into the lives of college students.
Banks and colleges have teamed up to offer students easy access to their college funds. Campus debit and pre-paid cards are being offered to those students receiving student aid. Schools are making money off of these cards and cut their own costs by outsourcing certain services. It would seem that this debit card practice would be receiving great reviews, but it seems that there are some very concerns behind the practices associated with the campus debit card.
The funds provided to college students as aid for their education costs are being robbed by service fees. Colleges balance out the cost of providing this service with outside banks. This brings additional fees to the student themselves. Once thought to be free access to a student’s financial funds are showing up burdened with fees. These fees are eating up their funded money.
Here are a few examples of some of the fees being charged:
- a fee for swiping the card.
- overdraft fees for each day the account remains overdrawn
- reloading or depositing fees when putting money back onto pre-paid cards
- fees for using the debit card with a personal identification number instead of signing like a credit card
- balance inquiry fee on top of any ATM fee that may exist
- inactivity fees
- ATM fees
These fees are being funded by the student’s financial aid. Banks and colleges earning revenue off federally funded money in certain instances are going against the regulations for the Department of Education.
College students are new to the banking world and are unaware of all their options and consequences. There are other options for banking services, but there is aggressive marketing for the debit card and/or pre-paid card options which are making it easier for college students to choose. It is a privilege for these students to get the college funds and grants, and to have it pecked away at by fees is outrageous.
The deals between the banks and colleges are mostly kept away from public knowledge and this practice is creating questions about what happens behind closed doors. The U.S. Public Interest research Group Education Fund is looking heavily into these areas and reporting their findings for the purpose of making everyone aware and creating avenues for change. These avenues may be making more options for students to choose as to how to access the funds without making it difficult to go outside the college’s offered card program.
Awareness to the students should be a priority in order to help prevent their money going towards fees. Like with any other type of money transaction, you will want to know all the ins and outs before making the final decision.
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