GAO Studying Changes to Student Debit Cards
Many college campuses now offer debit cards students can use to access their excess financial aid. These cards promise faster payments and better convenience over the traditional check.
But students need to be aware of the fees with these cards.
The Government Accountability Office recently conducted a study of over 850 college campuses nationwide. The study indicated that a significant number of these debit cards featured similar or lower rates than checking accounts with big banks. But the GAO was unable to retrieve information from some campus card companies about the fees they charge to their students.
Some debit cards come with fees that may make them an expensive alternative to a bank account. For instance, some debit cards charge fees for running transactions with a PIN rather than a signature. This is a fee that is not common with bank accounts. Some consumer advocates have also pointed out that campus cards are not linked to a wide range of free ATMs, which means students have to pay more money to withdraw cash or check their balance on another network’s ATM.
The Consumer Financial Protection Bureau already has actions in place to keep campus cards transparent about their fees and the incentives they provide to colleges for promoting their services. Students do not have to choose debit cards to receive their money. All schools are required to offer cash or check options as well.
Before you apply for a college debit card, weigh out the fees between that card and a bank account. Then choose the alternative that is more financially prudent for the long term.