Credit cards for college students can carry costly fees

For most college students, class schedules and social events are top of mind - not credit cards and potential fees and penalties.

But that's what a lot of students are running into with their new credit and debit cards.

Higher One is one of the biggest players, offering debit cards at more than 800 campuses across the country.

"We've seen high and unusual fees, the kinds of fees you wouldn't typically see on a regular retail bank account,” said Suzanne Martindale with Consumers Union, the policy and action division of Consumer Reports.

Consumers Union looked at Higher One and eight other companies that offer campus-sponsored accounts with cards that often come with a college logo.

Overdraft fees as high as $38 dollars, a 50 cent fee each time the debit card is used, out-of-network ATM charges that can run as high as $3 and even an inactivity fee were among the findings.

Consumers Union found some accounts have low-cost options, but students need to be careful, or risk hundreds of dollars a year in usage fees.

So why even sign up for one?

"Many students find it difficult to avoid signing up for these products,” Martindale said. “It may be the default option to manage their financial-aid money, and they're being nickel-and-dimed out of that aid."

In fact, a class-action lawsuit against Higher One alleges "aggressive and deceptive" marketing and a failure to disclose "unconscionable" fees. Higher One settled for $15 million. There was no admission of wrongdoing, but Higher One agreed to drop some of the fees.

Students don't need a campus-sponsored account to get their financial aid. By federal law, it can be directly deposited to an existing account or disbursed as a check or even cash.