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Students at the University of Colorado and 120 other colleges around the nation may have the opportunity to learn how to budget their finances and build credit through a new debit card program -- without the consequences of late fees or high interest rates.

In response to credit card laws that took effect in February, Boulder-based University Parent is organizing a student-friendly debit card that could help undergraduates transition from living at home to paying their own bills without racking up significant debt.

The Campus Dough card -- a Visa debit card to be released April 15 -- will cost $1.99 per month and provide a sort of "checking account for beginners," said Campus Dough organizer Sarah Schupp. It's intended to teach students how to manage their finances and budget their monthly expenditures.

"This card will be great for both independent students and those still receiving help from their parents," Schupp said. "Our program will provide students with monthly tips on how to save money as well as getting them special discounts at some local and nationwide stores."


As with most debit cards, the program will have options for online banking, allowing parents to transfer funds to a student's account. Some of the benefits of the Campus Dough card include loyalty rewards that have lower spending requirements and the capability to improve their credit, an advantage usually available only with credit cards. Also, an overdraft will only spur a 50 cent fee rather than the standard $30.

University Parent officials said they are working with credit bureaus to allow Campus Dough members to report "positive usage," like paying bills on time. This would help build credit, but the company would also report accounts with negative balances or continual overdraft fees, which could decrease their credit score, Schupp said.

Campus Dough was created in light of changes to credit card laws that now require anyone under the age of 21 to show proof of "sufficient income" or have a parent co-signer to be approved for a credit card. The new laws implemented through the federal CARD Act on Feb. 22 are intended to decrease national debt and stop credit card companies from targeting young adults who are more susceptible to racking up monthly fees they can't afford.

About 82 percent of undergraduate credit card holders nationwide carried balances on their cards, according to a study by Sallie Mae that described student credit card trends in 2009.

Since the announcement of the new CARD laws, credit card companies have been raising interest rates at an alarming pace, said Bill Fulk, chief lending officer at Elevations Credit Union. This creates higher monthly payments and longer pay-off periods for those who are not settling their debt monthly.

Fulk recommends that students planning to get a credit card apply through a nonprofit institution, like a credit union, since their rates and fees are usually lower than profitable corporations.

"From what I have seen, there is no better way to learn money management than by experience," said CU sophomore Bryan Olson.

CU freshman Jessica Ryan began learning how to budget when she got her first debit card at 16, but said she realizes many students don't understand the consequences of overdrafting and interest rates.

"I think it's great that students can get a card with lower fees, because then they can learn from their mistake without going even more broke," Ryan said. "But I think it could go either way because some students might take advantage of the low fees and feel like they can overdraft more often because it doesn't cost them as much."