Credit card issuers offer student debit cards to college students, hoping to maintain a relationship with them after graduation. Student debit cards come in various forms, including preloaded cards, cards with parental controls, and credit/debit card combinations. These cards can help parents monitor their children’s spending and teach them financial responsibility.
Credit card issuers provide student debit cards to college students in the hope that as students graduate and become productive income makers, they will maintain their relationship with the bank that issued the cards. Student debit cards come in many forms, including cards that parents sign, preloaded debit cards, and cards that charge a small fee each month. Most student debit cards carry the logo of a major credit card company and can be used anywhere such logos are accepted.
The main attraction of a student debit card is parental controls. In many cases, the parent secures the card and gives it to the student to carry. The parent loads the card with the necessary funds. Some families require weekly or monthly accounting to determine if the student is using the card responsibly. The cards usually have an online method of tracking usage, giving parents instant access to their students’ spending behavior.
Preloaded student debit cards generally require an initial deposit. They may also include a one-time activation fee. Money is loaded into authorized locations and funds are available to spend within minutes.
Student debit cards using this method usually have a daily spending limit allowed. These cards can help parents feel confident that their student won’t spend all their money too quickly and be forced into a budget due to the spending constraints placed on the card. If there are no funds left in the card account, transaction attempts will be declined.
Student debit cards linked to bank accounts use the money in the accounts to pay for purchases. Students use the card wherever debit cards are accepted. When the student swipes the card, the money is immediately set aside in the bank to cover the transaction. Such student debit cards can lead to overdraft fees if your bank account is set up with overdraft protection. The account holder has the option to decline overdraft protection on the entire account, in which case debit card transactions that exceed the account balance will be declined.
Many financial institutions also offer credit/debit card combinations. The student decides at the time of each transaction whether it should be executed as a credit or a debit. If it works as a credit, interest is charged and the transaction total is added to your current credit balance, to be paid in instalments. If the student has the transaction processed as a debit, the money is immediately withdrawn from the bank account funding the card and no interest is charged. In many cases, parents are asked to sign a combination credit/debit card, making the responsibility for the debt shared between parents and students.
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