Want to put a little
extra spending money in your pocket this semester?
If you are taking debit
or credit cards to college, following some smart tips can make the difference
between a few extra pizzas and a pile of bills.
From the best deals on
bank accounts to financial security in the dorm, here are eight things you need
1. You can save big
bucks by shopping banks
Do not automatically apply for a campus debit card. Instead, shop around for a
bank account and debit card first to compare costs.
"A lot of these
campus debit cards come loaded with fees -- even 'per transaction' fees,"
Ridout, consumer services manager with Consumer Action. "Just because the
school promotes a card doesn't mean that card is the best one for you."
Students who are
targeted with credit card marketing from their colleges might not know that
their colleges are really the ones benefiting from issuers. In 2015, the Consumer Financial Protection Bureau investigated 25 colleges that had
the largest agreements with credit card issuers to see if they were in violation of consumer protection laws. The CFPB
then sent letters to 17 of those schools, requesting
that they disclose the details of their school-sponsored credit card
The worry is students might not look
at rival issuers if their college is promoting a certain card.
"Shop around and
don't take it on faith," says Chris
Lindstrom, higher education
program director for US PIRG, which has criticized campus debit card fees. For as many deals [as]
we found [that] were good, we found campuses where students could have gotten a
better deal down the street."
2. You have a choice
with overdraft fees
Normally, your debit card will be refused if the purchase takes your account
below $0. But if you give the bank permission to charge (called ‘opting in’) overdraft
fees, the debit card will keep working even after you are out of money. And you
will get charged a fee -- often about $35 -- every time you use
the card, says Chi
Chi Wu, staff attorney with
the National Consumer Law Center.
"With debit cards,
the biggest problem is the overdraft fees," Wu says.
People in their late teens through early 30s make up more than a
third of “heavy overdraft users,” according to a 2015 report from the Pew
Charitable Trusts. The “overdraft users” are those who pay $100 or more in bank
fees in a year from overdrawing their bank accounts.
Banks and financial
institutions need your written consent in advance before they can allow your
account to dip below $0 and start charging overdraft fees. Wu suggests
declining that option, or revoking your consent if you have agreed to it in the
3. It is easier than
ever to track purchases and receipts
If you use your debit card daily, it is even more important to know exactly how
much money you have in your account. Three free options for keeping tabs on
your balance include:
- Apps and online offerings from
your bank or credit union.
- Websites such as Mint.com that
allow you to integrate your bank information and track finances.
- Text alerts available from your
bank or credit union.
No matter which option
you choose, recognize that not all purchases are deducted from your account the
minute you make them. Some may take several days, or even a week, to clear,
Dosher, managing editor for the consumer education department of the
Credit Union National Association. It’s best to make it a daily habit to check
your bank account online or via an app to make sure you’re not overspending and
also to check for any fraudulent withdrawals.
4. You can hurt your
If you run up a balance you cannot pay on your parents' credit card, you are
potentially hurting their credit scores, says Dosher: "It's your parent's
credit that's on the line."
Want to avoid problems?
Have a talk with Mom or Dad to spell out exactly what the shared card is meant
to cover, says Dosher. If they use fuzzy terms like "for
emergencies," get specific and have them spell out exactly what
constitutes a card-worthy emergency.
If you can’t keep your
spending under control, your parent might be better of removing you from the
card and getting a prepaid card instead, where a specified amount of money is
loaded on the card.
5. You have free access
to your credit reports and scores
At least once a year, pull all three of your credit reports and make sure
everything is accurate, says Anthony Harrison, principal
at Sprauve-Harrison Communications. If you've never had a credit card before, the likelihood of you
even having a credit report is small. But if you've got a student loan, odds
are that's in your report. You can get your credit score for free from mycreditcards.com or via Discovers’ Credit Scorecard.
Know that if you don’t have a credit report, you won’t have a credit score.
You are entitled to pull
your credit reports from each of the big three credit bureaus -- Equifax,
Experian and TransUnion -- for free each year through AnnualCreditReport.com.
Harrison says the keys to building a good credit score are:
- Paying on time
- Keeping your monthly usage to
20 percent of your available credit line or below
- Paying off the entire card
balance every month
"You don't need
multiple credit cards to have a good score," he says. Instead, Sprauve
suggests getting one good, all-purpose card, using it and paying it off
6. You probably can get
a credit card, but maybe you're not ready for one
Years ago, enrollment in college almost guaranteed you a credit card. "The
Credit CARD Act changed that," says Dosher, referring to federal credit card legislation signed into law in 2009.
Now, if you are under 21
and want a card, you either need verified income (enough to pay the bill) or a
co-signer. "Credit card companies are allowed to consider grants and
loans" as income, as long as a student is receiving an amount greater than
the tuition bill, says Wu.
There's a lot of marketing of 'student cards,' and
then there's what's good for students. And they're not necessarily the same thing.
But even if your loans
and grants cover more than tuition, that is not exactly disposable income. You
still need to do other things with the money. Such as buy books. And eat. So
while you may qualify, it is often smart to stay out of the credit card arena
until you have actual disposable income.
7. 'Plain vanilla' cards
If you do have some disposable income, opt for a general use credit card with
no annual fee that has good terms and a low interest rate, says Ridout. Remain skeptical of "student
cards," he says. "There's a lot of marketing of ‘student cards,' and then there's
what's good for students. And they're not necessarily the same thing,"
Instead, shop for the
card that best suits you, he says. That probably means a general-use card (not
a retail store card), with a low interest rate and no annual fee. "For a
student, there's absolutely no reason to be paying an annual fee," Ridout
8. Limit potential ID
In a dorm, you share a communal environment with little space and less privacy.
Safeguard your cash, debit cards, credit cards and personal financial
information. Also, use private devices and access banking information on secure
Never write down PINs or
passwords. Force yourself to log in to financial sites each time rather than
saving passwords or logins. You do not want your bank or card pages to pop up
if someone trolls through your phone or surfs on your computer. And devise a safe
hiding place for your debit or credit card.
"You just need to
recognize that it is money," says Ira Rheingold, executive director and general counsel of the National
Association of Consumer Advocates.
See related: 4 reasons why college kids need a credit card, A look at student credit cards