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Students Need to Prepare Now for Credit Card Changes

The following is guest article provided by Tisha Tolar.

After the recent changes to the debit card swipe fees banks are allowed to charge retailers, there is an up and coming agenda concerning the cost of credit card swipe fees. The Durbin Amendment has limited what banks are allowed to charge retailers in interchange rates.

For each transactions consumers make in-store with a debit card, the retailer must pay a fee to the banks for the activity. In years past, the interchange rate was 44 cents per customer transaction. With the Durbin Amendment now in place, those fees are being cut in half and as a result the banks are making less of a profit.

Affect on College Students

Because the banks are collecting less from the retailers on debit card fees, they need to now make up for those lost profits. This has resulted in the increased bank fees students may be encountering. From higher ATM withdrawal fees to maintenance fees on checking accounts, students will have to pay more just for dealing with a bank. In many cases the bigger fees are being incurred by customers of the larger banks but soon enough many financial institutions will likely have to pass on costs to customers.

Prepare for More Changes

Since the successful passing of the regulations concerning debit cards, lobbyists are now pushing for the same changes for credit card transactions. This means banks will now need to make up even more lost profits via their customers. For college students that maintain bank accounts for check cashing purchases or for the convenience of having a bank card, it will start to get even more expensive in light of the proposed changes.

What to Do Now

For college students that maintain their own bank accounts, it would make a lot of sense for you to meet with a bank manager and clarify what changes are being made, especially if you don’t feel you can afford the new charges being incurred. It may also be the right time to consider looking elsewhere. Smaller banks and community credit unions are still offering various incentives to customers whereas the big banks have already begun passing on the increased fees. Shopping around for a better deal before credit card swipe fee changes go into affect may be the best first step.

Here are some other tips to help college students stay financially stable:

Live By the Budget

College life is certainly a learning experience and it is the right time to learn about budgeting. A budget simple requires data concerning your income and expenses over the course of a month. Once you have identified how much money you receive in a month’s time, you need to subtract the expenses you have including cost of living expenses, entertainment, financial obligations (ie: bills), and all of your other expenses. If you subtract expenses from income and get a negative number, it is time to make some budgetary cuts. Once your budget has been established, make a commitment to living within its boundaries. It can be very tempting to sidestep those boundaries but living by a budget is the only way to assure financial stability. It will also be a useful tool for the rest of your life.

Stop Impulse Buys

While one of the supposed benefits of lower swipe fees on debit cards was that retailers would save money and pass along the benefits to the consumer, it does not seem that retailers are willing to part with their savings. In order to stick to a budget, you need to start getting consumer-savvy by comparison shopping for school necessities and personal items. Don’t shop at the convenience stores because it is convenient. You should work on pre-planning skills so you can be wise about your spending habits.

Understand Credit

You may have qualified for a credit card but that doesn’t mean you know how to use it responsibly. The CARD Act has changed the age limits of a person eligible to receive a credit card to age 21 there are still situations that allow younger students to have access to a credit card, such as being on a parents account or proving income stability to the credit card provider.

For this reason as well as your future financial life, it is imperative you understand how credit works. You may need to consult with your parents, a trusted professor, or a relative to find out exactly what responsibilities come with having a credit card. A large majority of college students graduate in deep depth thanks to their misunderstanding of credit.

Living a frugal life while still in school will help prevent debt loads that cause a lot of struggle after graduation. On top of student loan debts, running up credit card bills and other creditor accounts will make it more difficult to get financially ahead as school becomes a distant memory. With jobs already scarce, it is important students take the opportunity to learn as much as they can about their financial status so they can plan now for both the short and long-term.

Tisha Tolar is a financial writer for MyBankTracker.com, a site that helps consumers compare savings accounts, CD rates, and home equity loans to make informed banking decisions and save money.

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One Response to “Students Need to Prepare Now for Credit Card Changes”

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  1. […] credit rating will soar. Your bank will offer you better terms. You’ll be in the driving seat.Credit comes with pitfalls. We are told this regularly and for many people it seems to be all they e…quick to add charges to accounts when they feel that there is an opportunity to do so – and […]


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