Credit and Debit Card Ratings

Senate Scrutinizes Campus Cards

College students may have spent their summer break working or relaxing at the beach, but politicians, banks and consumer advocates have been busy trying to figure out the future of campus-related financial products – better known as campus cards.

 

At a hearing of the US Senate’s Banking Committee on July 31, senators heard a wide variety of opinions about whether or not further regulation is needed to guide partnerships between colleges and large financial institutions. In particular, the issue of the fees associated with students accessing student loan refunds via campus debit cards or prepaid debit cards was a matter of discussion. Currently, many colleges around the nation have signed deals with big banks to offer financial services to students on campus. These products and services often come with a school’s logo, as a result of multi-million dollar deals between the colleges and banks.

 

Christina Lindstrom, an official with the advocacy group US PIRG, testified that campus card arrangements are costly and unnecessary. “Right now students are being hit with high fees that are hard to avoid as they try to access their federal financial aid refunds through campus sponsored bank accounts and prepaid debit cards,” she said. Lindstrom went on to say that students at some schools were being charged “steep and unusual” fees to get their federal financial aid, including PIN transaction charges and overdraft fees of $37 and higher. “On the whole these accounts are not necessarily a better deal for students than what they might find through a bank not affiliated with the campus,” she testified.

 

By contrast, Richard Hunt, the president and CEO of the Consumer Bankers Association, told the committee that the relationships forged between banks and colleges have many benefits for students. “Some Consumer Bankers Association members have entered into agreements with institutions of higher education to provide useful services, such as campus ID cards that can be linked, at the option of students, to a standard deposit account,” he said. “These financial institutions also provide important services, such as on campus financial literacy programs and assistance with financial aid systems to colleges and universities.”

 

Hunt went on to cite a study by the General Accounting Office (GAO), the research arm of congress, that found that fees associated with college cards were not higher – and often were lower – than those charged by other banks.

 

The banking committee will continue to consider whether or not to place limits on campus card agreements.

 

Author: Chris Warren

  • Senate Scrutinizes Campus Cards

    Senate Scrutinizes Campus Cards

    College students may have spent their summer break working or relaxing at the beach, but politicians, banks and consumer advocates have been busy trying to figure out the future of campus-related financial products – better known as campus cards.

     

    At a hearing of the US Senate’s Banking Committee on July 31, senators heard a wide variety of opinions about whether or not further regulation is needed to guide partnerships between colleges and large financial institutions. In particular, the issue of the fees associated with students accessing student loan refunds via campus debit cards or prepaid debit cards was a matter of discussion. Currently, many colleges around the nation have signed deals with big banks to offer financial services to students on campus. These products and services often come with a school’s logo, as a result of multi-million dollar deals between the colleges and banks.

     

    Christina Lindstrom, an official with the advocacy group US PIRG, testified that campus card arrangements are costly and unnecessary. “Right now students are being hit with high fees that are hard to avoid as they try to access their federal financial aid refunds through campus sponsored bank accounts and prepaid debit cards,” she said. Lindstrom went on to say that students at some schools were being charged “steep and unusual” fees to get their federal financial aid, including PIN transaction charges and overdraft fees of $37 and higher. “On the whole these accounts are not necessarily a better deal for students than what they might find through a bank not affiliated with the campus,” she testified.

     

    By contrast, Richard Hunt, the president and CEO of the Consumer Bankers Association, told the committee that the relationships forged between banks and colleges have many benefits for students. “Some Consumer Bankers Association members have entered into agreements with institutions of higher education to provide useful services, such as campus ID cards that can be linked, at the option of students, to a standard deposit account,” he said. “These financial institutions also provide important services, such as on campus financial literacy programs and assistance with financial aid systems to colleges and universities.”

     

    Hunt went on to cite a study by the General Accounting Office (GAO), the research arm of congress, that found that fees associated with college cards were not higher – and often were lower – than those charged by other banks.

     

    The banking committee will continue to consider whether or not to place limits on campus card agreements.

     

  • CFPB To Police Prepaid Debit Cards

    CFPB To Police Prepaid Debit Cards

    In yet another sign of the mainstreaming of prepaid debit cards, the Consumer Financial Protection Bureau (CFPB) announced this week that it would begin accepting complaints from Americans encountering problems with these increasingly popular financial products. Although the market for prepaid debit cards has been steadily expanding and attracting big name financial players like American Express, consumer advocates have expressed concern about a lack of regulatory oversight.

    The CFPB is in the midst of developing proposed regulations targeted at prepaid debit cards, which should be released in the coming months. In the meantime, the CFPB, the federal government’s consumer watchdog for all manner of financial matters, is urging Americans who have run into problems with prepaid cards to get in touch. “By accepting consumer complaints about prepaid products and certain other services we will be giving people a greater voice in these markets and a place to turn to when they encounter problems,” says CFPB director, Richard Cordray.

    In its statement announcing the move, the CFPB outlined the specific issues consumers should alert it to, including:

    • Trouble managing, opening or closing an account
    • Incorrect or unexpected fees
    • Overdraft issues
    • Frauds, scams or unauthorized transactions
    • Advertising, disclosures and marketing practices
    • Adding money and savings and rewards features

    The CFPB already accepts consumer complaints about a wide range of financial products, including credit cards, mortgages, consumer loans and bank accounts. The CFPB complaint process works like this: After receiving a complaint, the CFPB expects companies to respond within 15 days and outline the steps they plan to take to address the problem. The CFPB also expects some sort of resolution to all complaints within 60 days. Consumers who do submit a complaint receive a tracking number and can follow the process on the CFPB website.

    Complaints about prepaid cards can be submitted through the CFPB website. In the same announcement about accepting prepaid debit card complaints, the CFPB also said that it would begin to address problems with debt settlement and credit repair companies as well as pawn and title loans suppliers.

Credit and Debit Card Ratings