Released: September 15, 2008

Prepaid debit cards marketed to students

Source: Mary Pilon, Wall Street Journal [Baltimore Sun] (Free Registration)

Many colleges have tightened rules on credit-card marketing on campus in order to discourage students from racking up huge amounts of debt. Now another kind of card is being pushed on campus - with its own set of issues.

This fall, financial-services companies are focusing more of their campus marketing on “prepaid debit cards,” which work like standard debit cards except that they aren’t linked to a traditional checking account. Among the issuers aggressively marketing their cards this year: U.S. Bancorp and Wal-Mart Stores Inc.

The cards typically carry hefty fees and offer fewer consumer protections than credit cards. Fees are often charged when the card is activated, when it is used at an ATM and even when there’s a lack of transaction activity.

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