CFPB Protects Young Consumers in Banking and Credit Cards
Written by: Kristy Welsh
Last Updated: August 30, 2017
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.
- Virtual checking accounts may waive or reimburse ATM fees (even out-of-network), and offer online banking, bill-pay, and lots of mobile apps. However, if and when you want to speak with someone about your account, you have no in-person options.
- Student checking accounts may offer all of the same benefits of a virtual checking account, plus an in-person option. However, you could be looking at a monthly maintenance fee if you don’t meet certain criteria.
- School-affiliated bank accounts may offer all of the same benefits listed above, plus the ability for your debit card to double as your student ID and its use for discounts at local or on-campus businesses. However, you could be charged a whole host of fees, including one every time you use your debit card, as well as monthly maintenance fees and inactivity fees.
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:
- Your complaint and supporting documentation is forwarded to the company for their review.
- The company has 15 days to respond to the CFPB and to you.
- The CFPB provides you with email updates on your complaint status.
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).