Gone are the days when credit card companies set up tables with free candy and other gifts to get new college students to sign up for their services.
This is the era of prepaid cards on campus.
American Express announced on Wednesday the launch of its Campus Edition Prepaid Card, a reloadable prepaid card available online and through more than 500 college bookstores operated by Barnes & Noble. The cards function much like a debit card but are not linked to a checking account.
An increasing number of banks and financial service providers, such as American Express, are marketing prepaid cards -- rather than the credit cards of yesteryear -- on campus to move around regulatory restrictions. The 2009 CARD Act limited the marketing of credit cards on campus and restricted lending to customers younger than 21. Other regulations have made checking-account debit cards less profitable for the biggest banks, which has sent them on the search for fresh ways to make money.
But buying one of these cards at a bookstore could be a rip-off even though getting it online is sweet deal.
The Campus Edition card costs $4.95 to buy in person; it is only a temporary card, which can't be used at ATMs. It costs about $5 to load it up with money via GreenDot MoneyPak (though that fee may be refunded in some circumstances).
The better option is to order a personalized card online, which is free. One can add money to it in person at the bookstore with a MoneyPak (again, watch the fees) or for free with an online bank transfer. These cards can be used at ATMs but, like so many things at college, only the first round is free; students are eligible for one free ATM withdrawal per calendar month and then a $2 fee is charged for each subsequent cash withdrawal.
While AmEx has tried to get in front of the stampede of prepaid cards rushing to college campuses, students might want to check out other options carefully. Ordering a Campus Edition card online and setting up online fund transfers can keep costs down -- but those $2 ATM fees can add up quickly.
The cards come with some other additional perks, including roadside protection, however.
Some prepaid cards from other companies offer free ATM use within a network and enhanced text message alerts about spending, but they might also have monthly maintenance fees. This week JPMorgan Chase also unveiled its reloadable card, which costs $4.95 per month but charges no fees for using or reloading it at Chase branches and bank ATMs.
Other banks like U.S. Bancorp have teamed up with universities to create a hybrid prepaid-college ID card. For example, U.S. Bancorp (the bank behind many prepaid cards) has partnered with North Carolina State University to offer an enhanced ID card that can double as a prepaid MasterCard. The fee for any of the university's 34,000 students and nearly 8,000 staffers to upgrade their card to the enhanced version is $10, charged by the school.
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