Are College-Branded Banking Accounts a Good Fit for Students?
Banks and credit unions have always been cognizant of the opportunity that presents itself with each new wave of college students entering the field of play. As such, it is a priority of financial institutions to get college students signing up for their brand of checking accounts as well as debit cards.
Therein lies the reason for which so many financial institutions choose to partner with colleges and universities—to facilitate to incoming students the necessity of having a bank account on hand.
But let’s dig deeper—for what reason do they really have to cultivate so many young, marginally fiscally secure college customers? Most would assume it is because these banks and unions hope to retain life long customers—starting them off in their early college years.
We all know how it goes—I myself am all too familiar with the process. Your parents sit you down one night in early August, with about a month before you move in to your dorm, to formulate a plan regarding setting up your own personal checking account. As an eighteen-year-old high school-college inbetweener, to say you are oblivious in regard to the ways in which checking accounts and debit cards work is an understatement.
You know a little bit about the benefits of having a banking account in place, but you are otherwise completely ignorant as to the terms in which these co-branded accounts offer.
As such, experts reveal that some of the school-branded accounts may in fact not deliver the most beneficial terms for college students.
“Some of these co-branded accounts could provide good value to the students, but that’s not always the case,” commented Rich Williams, a representative of the Consumer Financial Protection Bureau (CFPB). “Financial institutions often pay schools millions of dollars in exchange for this exclusive marketing arrangement.”
On the contrary, the co-branded accounts are deemed to offer very few benefits to the students it seeks to recruit according to a study from the nonprofit Center for Responsible Lending.
“Remember, your college hasn’t necessarily reviewed all of the accounts available and decided this is the best account for their students,” said Maura Dundon, CRL’s Senior Counsel. “In fact, they’re getting money to help the bank market this to you.”
As a student, depending on the financial backing that either is or isn’t provided for you via parental guardians, your funds are more often than not, tight. Therefore, as a student you typically seek services that will ultimately save you money on service charges and things of that nature.
If as a college student you see a logo of a bank or union attached to a school website, you are automatically going to assume that these financial institutions offer certain benefits due to their suggested partnership with that particular academic institution.
As we can see from this report, this is not always the case. This is clearly problematic for students, as well as parents of students, who are seeking the best possible option in setting up a banking account that offers at least some form benefits for their hopeful scholar.