Warn your students: deceptive credit practices

September 12, 2008

Yesterday I mentioned about a settlement by a bunch of the biggest student lenders in the country, whom NY Attorney General Cuomo alleged were engaged in deceptive lending practices. See the article titled “Deceptive student loan practice, caught in the act”.

The Wall Street Journal ran another article about different insidious little danger you need to guard yourself against and warn your students:  the "New Card on Campus: Prepaid Debit."

The short of it is that these babies are loaded up with excessive, border-line predatory fees.  And they're being marketed by the good folks of Wal-Mart and U.S. Bancorp.  Another clever bank is advertising on Facebook.

Yes, they're technically not "credit cards," and it's tough to incur overdraft or debts.  (The average college grad is saddled with $2,748 in credit-card debt;  25% have more than $5,000+. Student loans are on top of that!)

Bottom line:  understand that YOUR students will be bombarded with offers for these prepaid debit cards, credit cards and other temptations that could lead to financial stress.

Look out for ATM fees, monthly "inactive account fees, set up fees and overdraft fees (some banks do assess them).  Be careful!

Teach your children well... ♫♪

(see the Wall Street Journal article here http://online.wsj.com/article/SB122109287812921669.html?mod=2_1559_topbox)

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