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Watchdogs concerned about PNC-GOCard partnership
Georgetown University and PNC Bank have partnered this year, enabling the Georgetown One Card to be linked to a PNC bank account. Though on the surface the move has been touted as a convenience for GOCard holders, consumer advocates have begun to draw attention to the deceptive practices of banks on university campuses.
In May 2012, the United States Public Interest Research Group released a 40-page report discussing partnerships between banks and universities through campus debit cards. In some cases, universities receive substantial throwbacks from banks, while students, typically new to the banking system, are susceptible to high fees, including those from overdraft protection and ATM transaction.
For example, Higher One, a leading financial company working in conjunction with 520 campuses, takes advantage of customers new to the banking system by charging obscure hidden fees. According to the U.S. PIRG report, the company derives 80 percent of its profits from “interchange fees, ATM fees, non-sufficient funds fees, and other banking services fees.”
Investigation of PNC’s debit card program reveals it to be far from the worst culprit. Unaffiliated with Higher One, PNC does not charge inactivity fees nor does it allow the distribution of financial aid through the GOCard, a practice that has been abused by other banks through the manipulation of ATM locations that charge students to retrieve their financial aid. Additionally, “there is no fee for a returning user to switch their existing GOCard to the new GOCard that is compatible with PNC,” said Stacy Kerr, Assistant Vice President of Communications at Georgetown.
The PNC student debit card aims at the banking process to benefit college students. For example, students have access to PNC Virtual Wallet, an online service designed to aid students with money management.
“Benefits for the community and students include free workshops, on topics such as Budget 101 and ID theft, as well as the PNC Virtual Wallet, with tools such as Parent Alerts and Calendar for payment scheduling, which is more intuitive than a ledger,” said Fred Solomon, Vice President of Corporate Communications for PNC.
While such endeavors seem noble, Rich Williams, a consumer advocate and co-author of the U.S. PIRG report on campus debit cards, believes the initiatives aren’t as altruistic as they appear.
“Banks trip over themselves to offer financial management classes on campus for brand recognition anyway,” Williams wrote in an email, “particularly at a school like Georgetown where graduates will both make more money and use banks services in the future at higher rates.”
One benefit that may have deceptive effects is the overdraft protection policy. When selecting a debit card, the decision to have overdraft protection should be carefully considered. By opting into overdraft protection, account holders allow transactions to be processed even when checking account balances enter the red. However, the feature comes at a steep price.
Opting in lets you overdraft on everyday purchases, which otherwise is not allowed by law. PNC has especially high fees for this overdraft protection, charging $36 for enabling transactions for accounts with deficits of over five dollars, which is six dollars above the national average. If you purchase a sandwich for six dollars and your balance is at zero, overdraft protection allows the purchase, with a $36 fee. Your sandwich just cost you $42.
“It is very alarming how PNC charges overdrafts,” wrote Williams. “It is actively recruiting students to opt into overdraft protection, which is a dirty tactic banks use to make consumers overdraft more.”
PNC boasts of its courtesy overdraft fee waiver for the student debit card. If a student overdrafts in the first 12 months with the account, the first offense is pardoned, encouraging students to opt into overdraft protection. The second overdraft fee is $25.
On the benefits of the system, Kerr said that “PNC has an alert service where you set up texts to yourself so that when your account goes below a certain amount, a value which you select, PNC notifies you.”
Although the first waived overdraft fee is a benefit, “half of young adults who overdraft each year do so on average seven times, so this benefit is insignificant compared to the harm of the overdraft fees themselves,” Williams wrote. Additionally, an overdrawn PNC account faces a continuous overdraft charge of seven dollars per day. With so many students unfamiliar with banking practices, PNC’s practice of overdraft protection is liable to catch some unawares.
Williams and other consumer watchdogs such as the Consumer Finance Protection Bureau encourage college students to explore multiple banking options around campus before making a selection. But despite concerns from its critics, PNC’s student debit card system has not received complaints from the University thus far, and, according to Kerr, “We’re certainly not getting complaints from students.”