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Students need to be aware of how credit/debit cards work

Jan. 16, 2013 @ 12:00 AM

As students become more responsible for paying their own bills, they need to be aware of the types of cards available, according to Kentucky Higher Education Assistance Authority.

Debit cards are tied to a bank account. When someone uses a debit card, the money is automatically deducted from the account. Most colleges issue a type of debit card to students that can be used to buy books, supplies and meals. In that case, the card is not tied to a bank account but is preloaded with funds deposited each semester or quarter.

When a debit card has been lost or stolen, report it to the bank or credit union immediately to limit losses from unauthorized use.

Credit cards offer what is essentially an interest-free loan if the balance is paid in full each month. Students who use credit cards should pay them off at the end of each pay period when possible to avoid paying interest fees. Most credit cards also offer cash advance services at a higher interest rate.

Lost or stolen credit cards should also be reported immediately. However, there is a $50 limit to the consumer's liability on fraudulent charges with stolen credit cards.

ATM cards allow users to withdraw cash from their accounts when the bank or credit union is closed. Most banks and credit unions charge a fee when ATM cards are used at a machine not owned by that institution's network, and those fees can add up. Students should not use an ATM card outside their network unless absolutely necessary.

KHEAA is a public, nonprofit agency established in 1966 to improve students' access to college. It provides information about financial aid and financial literacy at no cost to students and parents.