Students, be wary of Debit Cards with overdraft "protection"

padre31 · May 27, 2009

"Students are not getting enough education - from parents, high schools, colleges - on how to handle debt and their finances," says Rogan, who teaches accounting. "It's one of the reasons we have a financial crisis today."

But credit cards aren't the only financial plastic that can trip up college students. Debit cards - usually tied to a bank account - also can be financial quicksand. In its 2007 study - subtitled "The Most Expensive Burger Ever," the Center for Responsible Lending found that young consumers - ages 18 to 24 - pay more than $3 for every $1 in a debit card overdraft.

When getting a debit card from a bank or credit union, avoid those that offer "overdraft protection" tied to a credit card. Look for one with overdraft protection that's linked to your savings account. If you don't, every time you overdraft, many banks will ding you an average of $34.

Let's say your bank account is running on empty, and you buzz around campus, using your debit card to buy a $4 coffee drink, a $12 bookstore purchase and a $6 burger. Your tab won't be $22. It'll be $124, if overdraft fees are added on.
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http://www.philly.com/philly/business/personal_finance/052609_college_credit_cards.html

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