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Protection Offered by CFPB on Student Credit Cards

CFPB is Protecting Young Consumers in Banking and Credit Cards

Last Updated: May 23, 2016

We expect colleges to look out for the best interest of their students. This not only includes curriculum and on-campus safety, but also their financial well-being. Unfortunately, many schools are falling short in the financial department, thus the importance of CFPB protection.

Conducts Inquiries into On-Campus Student Financial Services

In 2013, the CFPB conducted a 9-month inquiry into school-affiliated debit cards. What the agency discovered is that arrangements between colleges and banks are not only confusing to college students, but costly too.

Students may presume their schools promote a specific bank because their products represent a good deal for them. However, in many cases, the only good deal is the one for schools getting paid to market bank checking accounts and debit cards to their students. Yet, while these schools make millions off the arrangement, expensive fees eat into students’ already limited funds.

What’s worse is, some students don’t realize they have any other choice.

Informs College Students of Their Banking Options

Rather than settle for what’s most visible and convenient on campus, students are advised to weigh the pros and cons among all of their banking options. The CFPB provides a detailed side-by-side comparison of school-affiliated bank accounts, student checking accounts, and virtual checking accounts.

For instance:

What the CFPB most strongly advises is that you look into your options early so you can 1) set up a bank account as soon as possible, 2) avoid as many fees as possible, and 3) set up direct deposit with your school so that you have immediate access to your financial aid funds.

Maintains Database of School Credit Card Agreements

Though it’s tougher now for college students under 21 to get credit cards, it’s still possible provided you a) have a co-signer, or b) meet certain income criteria. This has drastically decreased banks’ focus on marketing credit card to college students (opting instead to focus on other student financial products, like debit cards).

However, if your school does have an agreement with a bank to market credit cards to its students, you deserve to know about it.

To that end, the CFPB maintains an impressive database of credit card agreements, searchable by school, credit card issuer, and location. It also includes the number of open accounts and how much each school received from the bank to market their credit cards to their students.

Accepts Student Banking Complaints

Do you have a complaint about the opening, closing, or management of a checking or savings account? What about problems with deposits or withdrawals, debit cards, or fees?

Whatever the issue relative to your student banking account or service, the CFPB wants to hear about it.

When you submit a complaint to the CFPB:

Note, the CFPB also shares complaints with state and federal law enforcement agencies, and sends a complaint report to Congress twice a year. Your complaint may also be posted to the Consumer Complaint Database (minus any personally-identifying information).

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