According to a new report from U.S. Public Interest Research Groups, when college students sign up for checking accounts via their schools, bad things are likely to happen. These accounts and associated debit cards often come with heavy fees that put students — some of whom are financially independent for the first time — in a tough spot.
US PIRG found that 1.1 million college students are currently signed up for one of these campus debit cards. These cards are part of a marketing deal between banks and schools. The banks pay the schools for the chance to get students signed up. The schools often sell the cards as an easy way for students to access their financial aid. The problem is that the accounts come with unexpected fees and that leaves some students struggling.
The report found that college students paid more than $24 million dollars in banking charges in 2018, and many of those came via campus checking accounts. While the accounts typically have no monthly charges, they do come with out-of-network withdrawal fees, wire transfer fees and overdraft fees — that average of $35 a pop. Unsurprisingly, students who use these campus-marketed accounts pay more in fees than those students who use non-campus banking services.
The best way to avoid this issue is by making sure you keep an open dialogue with your college kid. Consider whether opening an account for them with your credit union or bank would be a more appropriate solution. (Keep the need for ATM access in mind.) Talk to them about these campus accounts. The more knowledge they have, the better.