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It's seems so easy - just whip out that shiny card with the raised numbers and money spits out of the ATM. One swipe at the register in the mall and the purchase is yours without money ever actually changing hands. But is it really that quick and painless?
USAA Financial Planning Services recently conducted a survey titled "Freshman Finance 101" in which it found that "79 percent of students surveyed have not discussed a budget for discretionary funds with anyone, and almost one-fourth (23 percent) believe they can spend up to $500 without their parents' approval."
In addition to credit and debit cards, many college students live an insulated day-to-day life in terms of financial responsibility - they live in residence halls without the worry of monthly bills and purchase food with the "fake" money of meal plans and systems such as the Eagle-one card at Boston College. Although students (or their parents) pay for these things in the form of tuition, it is easy to take monetary matters lightly when the actual money doesn't come out of your pocket on a daily basis.
At BC, most students seem to be aware of the financial issues that they face as students at an expensive private university. Jen Luoma, A&S '06, spoke with her parents about her financial responsibilities before coming to BC freshman year.
"We talked about how I was going to pay for books, my own spending money, and if I was going to put away my summer earnings," she said. Now that she is a senior living on campus without a meal plan, she is even more aware of how she uses money in her daily life. "I definitely think about how I'm going to buy groceries and about living cheaply. I have an on-campus job, so that helps with weekend spending."
Kate Armstrong, A&S '09, discussed financial matters with her parents and took on the responsibility of paying for part of her tuition in addition to her own personal and social expenses.
"We made a deal that I would pay 20 percent of tuition, so I worked all summer and I have a job here," she said.
Students also said that their parents trust them to make good decisions regarding their money, and that their parents don't put limits on or have rules about their spending.
"I just have the credit limit on my credit card," said Rob Lemein, CSOM '06. "I pay the balance every month, so if I have the money, I can spend it. I take care of myself, although not my basic needs, but once I graduate everything will be on me."
"I put limits on myself," said Julie Kelley, A&S '07, who has both a credit and a debit card. "If I make a big purchase I try to even it out so it doesn't get out of control. I have an on-campus job so if something costs an entire week's worth of pay, I think again about buying it."
To make financial decisions easier for students, many banks offer special student accounts and credit opportunities. Sovereign Bank has free student checking with no minimum balance or monthly maintenance fee, according to James Robinson, business banker at the Chestnut Hill branch. The bank's ATM card can be used at other banks without incurring a fee, and it also offers free Internet banking and bill pay, unlimited check writing, and free domestic wiring to make it easier for parents to transfer money to their children. They also have preferred student Master and Visa cards that offer students better rates and are backed by Sovereign. Sovereign is also open to teaching young adults how to manage their money, although it notes that this responsibility ultimately lies with the parents.
"On a branch-by-branch basis we will go to colleges nearby and give a seminar on how to set up a checking account and what you should and should not do," said Robinson. "We leave that up to the parents, but if a school wanted to have a seminar then of course we're willing to do that, and we have the materials to do that."
Bank of America offers a "Campus Edge checking" account with no minimum balance and no monthly maintenance fee for six months, according to Diane Wagner, Bank of America spokeswoman. If the student's parents have an account with Bank of America, there is no fee for five years.
The bank also has free online banking and unlimited bill pay to make things easier for college students on-the-go. It also provides account users with a Visa check card and debit card and a "total security protection package" that covers customers for purchases made when their card is lost or stolen. The bank has also recently introduced a new feature called "Keep the Change" where purchases a customer makes with their debit card are rounded up to the nearest dollar, and the difference is put in the customer's savings account. The bank matches the amount for the first three months and then at a rate of 5 percent a year after that.
"It's like an electronic change jar, you are saving money that you probably wouldn't even know you had," said Wagner.
For more information on student accounts and finance managing you can visit the Sovereign Bank and Bank of America Web sites at www.sovreignbank.com and bankofamerica.com, respectively.
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