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Student credit cards and young credit

What to look for when committing to a campus card

Summary

Regulations have changed how campus debit cards work so proceed with caution when signing up for a new account.

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Debit or prepaid accounts linked to a college ID card can be a convenient financial tool for students, but the accounts might come with costly pitfalls.

Many students opt to activate the card’s financial account features because it is a fast way to receive financial aid from the bursar’s office. The U.S Department of Education announced regulations to protect students against excessive fees. These regulations went into effect July 1, 2016.

According to consumer advocates, schools are federally required to send you a check instead if you choose, make an electronic Automated Clearing House deposit to your bank account, or give you other options for your financial aid to be deposited into a different account in an equal amount of time as the school’s banking partner. Here are some of the issues to watch for when signing up for a campus card account:

  • Surprise fees. Charges for leaving an account inactive, closing an account or failing to keep a minimum balance can lead to unexpected costs.
  • Overdraft programs. As with standard checking accounts, overdraft privileges that let you withdraw more money than you have in the account are often a hyper-expensive form of borrowing.
  • ATMs. A bank’s on-campus ATMs are usually fee-free, but they may run out of money at peak times or be unavailable after hours. Some cards provide three to five fee-free uses of out-of- network ATMs per month; however, the out-of-network bank’s ATM charge will still apply.
  • Swipe fees. Since the regulations went into effect swipe fees should not exist on student cards any more. Some cards used to charge a 50 cent swipe fee for PIN debit transactions. If these fees are still on your card, alert your banking institution.
  • Monthly fees. Most campus cards — and off-campus student checking accounts — have no monthly fee. However, some banks may impose the fee but waive it for maintaining a specified minimum balance or a minimum monthly amount of direct deposits.

See related:Student card survey: Offers fewer but more generous , CFPB urges colleges to compare deals for student accounts

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