The College Debit Card Trap
High fees can make branded cards a bad deal.
When students start school this fall, they should study the fine print before signing up for a debit card sponsored by the college or university. Some of these cards carry fees that are far higher than what you’d pay at a bank or credit union.
Some debit cards are used to disburse a student’s financial aid refund (the balance after bills for tuition, room and board, and fees are paid), and they’re typically less expensive. But when financial institutions pay schools for permission to market directly to students, fees spike. Students at these schools paid an average of 2.3 times more in fees than students at schools without such agreements, according to a 2019 study by the U.S. Public Interest Research Group, a consumer advocacy group. Banks often bombard students with promotions before they arrive on campus and promote cards at registration events.
Students (and parents) interested in a campus-sponsored debit card should proceed with caution because there’s a good chance they’ll remain with that bank after they graduate, says Ken Tumin, founder of DepositAccounts.com. He recommends comparing the branded card with debit cards offered by credit unions and online banks. Look for a card that has no overdraft or ATM fees.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
-
S&P 500 Hits New High Before Big Tech Earnings, Fed: Stock Market TodayThe tech-heavy Nasdaq also shone in Tuesday's session, while UnitedHealth dragged on the blue-chip Dow Jones Industrial Average.
-
4% and Chill? Find Out If This Distribution Rule Fits Your RetirementTake this simple quiz to discover whether the 4% Rule will work for you in retirement.
-
Oregon Tax Kicker in 2026: What's Your Refund?State Tax The Oregon kicker for 2025 state income taxes is coming. Here's how to calculate your credit and the eligibility rules.
-
9 Types of Insurance You Probably Don't NeedFinancial Planning If you're paying for these types of insurance, you may be wasting your money. Here's what you need to know.
-
New Ways to Use 529 PlansTax-free withdrawals from 529 plans could help you sharpen your job skills.
-
Smart Strategies for Paying Your Child an AllowanceBy giving your kids money to spend and save, you’ll help them sharpen their financial skills at an early age.
-
My Four Pieces of Advice for Women Anxious About Handling MoneyTalking about money can help you take control of your finances.
-
I Want to Help Pay for My Grandkids' College. Should I Make a Lump-Sum 529 Plan Contribution or Spread Funds out Through the Years?We asked a college savings professional and a financial planning expert for their advice.
-
Amazon Resale: Where Amazon Prime Returns Become Your Online BargainsFeature Amazon Resale products may have some imperfections, but that often leads to wildly discounted prices.
-
How Intrafamily Loans Can Bridge the Education Funding GapTo avoid triggering federal gift taxes, a family member can lend a student money for education at IRS-set interest rates. Here's what to keep in mind.
-
How an Irrevocable Trust Could Pay for EducationAn education trust can be set up for one person or multiple people, and the trust maker decides how the money should be used and at what age.
