College Bank Cards 9/8/14
Campus-sponsored bank accounts and prepaid cards may seem an easy and convenient choice. And they often also serve as student IDs.
But Consumer Reports has found some of these accounts could be a fee trap.
“Higher One allows you to manage your money easier and get your refund fast.”
This is a recent promotional video for Higher One. It’s the biggest player in campus banking and says it offers cards at more than 800 institutions nationwide.
Consumers Union, the advocacy arm of Consumer Reports, looked at Higher One and eight other companies that offer campus-sponsored accounts. Staff attorney Suzanne Martindale says students should be very careful about signing up for them.
“We’ve seen high and unusual fees, the kinds of fees you wouldn’t typically see on a regular retail bank account.”
Fees from the various companies can include overdraft fees as high as 38 dollars, a fee each time you use the debit card of 50 cents, out-of-network ATM charges that can run as high as three dollars, and even an inactivity fee if you don’t use your account.
Consumers Union found that while some of the accounts it analyzed have low-cost options, students need to use the accounts carefully or risk incurring hundreds of dollars a year in usage fees. So why would anyone sign up for a campus-sponsored account?
Suzanne Martindale said, “Many students find it difficult to avoid signing up for these products. It may be the default option to manage their financial-aid money, and they’re being nickel-and-dimed out of that aid.”
In fact, a class-action lawsuit against Higher One alleges “aggressive and deceptive” marketing and a failure to disclose “unconscionable” fees.
Students don’t need a campus-sponsored account to get their financial aid. By federal law, you can have it directly deposited to an existing account or get cash or a check. The lawsuit against Higher One is expected to settle this fall for 15-million dollars. There is no admission of wrongdoing, but Higher One has agreed to drop some of the worst fees.
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