Published: March 2015

College students targeted for predatory prepaid cards

The relationship between colleges and credit card issuers comes under increased scrutiny as legislators, advocates and the Consumer Financial Protection Agency (CFPB) doubt the benefits of linking student ID cards to a student’s credit or checking accounts. These cards, often used to distribute student aid funds, incorporate abusive practices and come loaded with fees.

Colleges and universities allow financial institutions to exclusively provide debit or credit cards to students in exchange for millions of dollars a year in royalties and bonuses by allowing card issuers to use their school logos and approach their students.

Many of these debit and credit cards  are marketed with low upfront costs but came with hefty ATM and overdraft fees, according to a recent report by the Center for Responsible Lending (CRL),. Because these accounts are often used to distribute students’ financial aid funds, CRL found that the excessive overdraft fees put  financial aid – used for books, program dues and living expenses – at risk.

For more info on the report see: “Overdraft U.: Student Bank Accounts Often Loaded with High Overdraft Fees”

Lead Organization

Center for Responsible Lending (CRL)

Other Organizations

American Federation of Teachers | Americans for Financial Reform | Center for Responsible Lending | Consumer Action | Consumers Union | NAACP | New Jersey Citizen Action | One Wisconsin Now | Student Debt Crisis | Student Labor Action Project | Tennessee Citizen Action | U.S. Public Interest Research Group | United States Student Association | Woodstock Institute | Young Invincibles

More Information

For more information, please visit CRL's website.

Download PDF

College students targeted for predatory prepaid cards   (studentgroupCFPBprepaidrule.compressed.pdf)

 
 

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