University Parent Media and StorValue Card Solutions LLC this month launched the Campus Dough DebitSmart prepaid card, which enables college students to improve personal money management while earning rewards.

The Visa-branded reloadable prepaid card, issued by Iowa-based MetaBank, is designed to teach college students how to maintain monthly budgets and provide them with online access to spending and transaction activity, text and e-mail alerts, and mobile banking services.

Boulder, Colo.-based University Parent, which produces print and online college and university guides for parents, developed Campus Dough after “working with universities and learning about the struggles students have with debt,” Sarah Schupp, University Parent CEO, tells PaymentsSource. “We wanted to create something to help students financially, and when the Credit Card Accountability, Responsibility, and Disclosure Act took affect, developing a card became even more important,” she says.

After the Credit CARD Act took affect, consumers younger than 21 no longer were able to open a credit card account unless they could show their ability to pay off their card debt.

The Campus Dough card enables cardholders to make in-store, online and over-the- phone purchases. The card has a daily reload limit of $500 per day, which also is the maximum amount cardholders may withdraw from an ATM.

StorValue, a Coconut Creek, Fla.-based prepaid debit card distributor, is cobranding the card with University Parent. Through this partnership, cardholders may earn cash-back rewards at participating merchants, which include Best Buy Co., Borders Direct LLC and PetSmart Store Support Group Inc.

“Cardholders using the Campus Dough card have access to over 700 online merchants, 70 big-box retailers and a number of local community merchants such as dry cleaners and nail salons,” where they can earn rewards, StorValue CEO Tom Borzilleri tells PaymentsSource. StorValue plans to add about 100,000 more merchants, mostly local, to the program within the next four months, he says.

Cardholders earn reward points based on a percentage of the transaction that ranges from 3% to more than 40%, depending on the merchant, Borzilleri says. Additionally, “about 8% to 10% of each transaction fee goes back to the cardholder’s university to help pay for various programs,” he adds.

However, only universities participating in the University Parent program will get money back from each transaction, Schupp says.

Opening the card requires no credit check. To activate cards, students must go to a Green Dot or Western Union location, either in-person or online, before linking the prepaid account to a checking account, Borzilleri explains. StorValue also waives the first Green Dot charge of $4.99 when cardholders activate the card.

After the initial activation, however, cardholders pay $4.99 to reload their cards. They also may purchase individual Green Dot MoneyPaks from several merchants, such as CVS drugstores and Walmart Inc. stores.

After the initial activation, students may set the card up to obtain free direct payroll deposits, financial grants, scholarships and other types of college fund or loan deposits. Students also may pay utility bills through card’s online bill pay-service, Borzilleri says.

“The biggest difference between the Campus Dough card and other campus cards, however, is that it is an open-loop card” usable wherever Visa is accepted, Borzilleri says. Most campus cards are restrictive because “they only enable cardholders to use the card at select merchants local to that particular campus,” he says.

With the Campus Dough card, “students who may live 10 states away from their college or university will still be able to use the card when they go home or travel,” Borzilleri notes.

While StorValue believes this card will resonate with students, some observers are wary because most students already have a checking account linked with a debit card, Bill McCracken, chief executive of the financial services research firm Synergistics Research Corp. in Atlanta, tells PaymentsSource.

Additionally, most regular debit cards do not have the additional fees the Campus Dough card has, McCracken says. “The Campus Dough card has a monthly transaction fee of $1.99 and also carries a fee for almost everything a cardholder uses it for,” he explains.

Cardholders pay 50 cents for ATM withdrawals and to receive cash back at the point of sale, and 25 cents when using PINs to initiate purchases, McCracken says. Plus, “if a parent wants to transfer funds to the Campus Dough card, they get hit with a $1 fee,” he says.

Students who want this type of card should compare it with other cards, such as the Walmart Money card, “which is successful in that is has structured itself to have lower fees,” McCracken says. It comes with a slightly higher monthly fee at $3, but it does not include additional charges the same way the Campus Dough card does, he says.

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