College students need to do their homework before signing up for a campus debit card.
According to a recent study from Consumer Reports, many campus banking products have little transparency and high, varying fees that can end up costing students hundreds of dollars.
CR analyzed campus banking services offered by nine financial institutions, comparing their terms and calculating average costs. Consumerist said about 11 percent of U.S. colleges and universities have banking agreements with financial firms.
“We found that while some campus banking products offered simple, low-cost fee structures and convenient access to funds, others came with high or multiple usage fees that added up to significant annual costs for those who use their cards frequently,” the study said.
CR said heavy card users face up to $250 per year in ATM charges, overdraft fees and point-of-sale PIN fees. Overdraft fees of up to $38 a pop could be assessed.
So if the students aren’t reaping many awards in the campus banking arena, who is? More often than not, universities come out on top. Instead of issuing and mailing financial aid checks, the money can go directly onto the campus card, saving on administration costs. CR said:
Colleges and universities may enter into campus banking contracts that are more beneficial for their bottom lines than for their students, indirectly shifting fees associated with financial aid processing to students. Students may face limited choices and extra fees as a result of these relationships.
USA Today said campus banking can be very lucrative for universities.
Schools aren’t required to disclose their financial relationships unless they pertain to credit cards and private student loans. The few deals that are public show that schools are paid millions of dollars to market banking products.
What do you think of colleges benefiting from lucrative campus banking products? Share your comments below or on our Facebook page.
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