Credit card issuers offer student debit cards with parental controls and various forms, hoping to maintain relationships with students after graduation. Preloaded cards have daily spending limits, while bank account-linked cards may incur overdraft fees. Some institutions offer credit/debit card combinations with co-signing options.
Credit card issuers provide debit cards to college students, hoping that when the students graduate and become productive income earners, they will maintain their relationships with the bank that issued the cards. Student debit cards come in various forms, including cards that parents sign up for, preloaded debit cards, and cards that charge a small fee each month. Most student debit cards bear the logo of one of the major credit card companies 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 funds as needed. Some families require a 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 children’s spending behavior.
Preloaded student debit cards generally require an initial deposit. They may also include a one-time setup fee. Money is loaded at authorized locations and funds are available to spend within minutes.
Student debit cards using this method generally have a daily allowable spending limit. These cards can help parents feel confident that their student won’t spend all the money too quickly and be forced to budget due to spending restrictions placed on the card. If there are no funds left in the card account, attempted transactions are declined.
Student debit cards attached to bank accounts use the money in the accounts to pay for purchases. Students use the card anywhere debit cards are accepted. When the student swipes the card, the money immediately goes to the bank to cover the transaction. Such student debit cards may incur overdraft fees if the 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 attempted 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 if it should be executed as a credit or a debit. If executed as a credit, interest is charged and the transaction total is added to the current credit balance, which will be paid in installments. If the student processes the transaction as a debit, the money is immediately withdrawn from the bank account that funds the card and no interest is charged. In many cases, parents are asked to co-sign credit/debit cards, making parents and students share the debt.
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