BEL AIR, Md. – The $140 million HAR-CO credit union has launched a proprietary debit card program designed to help students at a local high school learn financial skills. Students age 14 and above at the John Carroll School, a parochial school in Bel Air, Maryland, are able to open checking accounts at the CU and then transform their existing student identification cards into Patriot Cards, which they can use to purchase lunch at the school cafeteria as well as items from the school bookstores. The credit union partnered with a local card processing company and developed a secure, proprietary, limited use system just for the school. The company's private network allows the debit cards to be used in controlled circumstances while still allowing students to experience all of the various account access channels from Internet banking to in-person transactions to managing their checking accounts. "Helping students learn basic money management early on is a major goal for HAR-CO," explains president/CEO Jim Meehan. "When the opportunity to work with The John Carroll School to offer students age 14 and older an in-school debit card came up, it was the perfect chance to do that." One of HAR-CO's directors, Dick Paaby, is an English teacher at John Carroll, so when the school wanted to find a way to help their students learn to better manage money, it was natural to turn to Harford County's education credit union for help.
Meehan explained that the schools' need to better teach students financial literacy dovetailed with the CU's desire to help make younger people more familiar with credit unions.
"At a NAFCU conference in Denver a few years ago there was a workshop on ways to involve young people more in credit unions," he explains. "I was looking at that idea and thought of a debit card/swipe card of some sort to give students some control of their financial lives, especially at school. I didn't want a credit card that could get them in trouble, but something focused on school activity."
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Meehan explained that the project had two goals. First, to make transactional processing with the card more convenient for the parents and the second, and more subtle, to give students a taste of living in the real world of financial relationships.
"That's why we have an overdraft fee of $3.00 on the accounts," Meehan said "to remind the students that there are real life consequences for poor financial decisions. Even though the parents are co-account owners, the students themselves are the primary account holders and can access the accounts online just like everyone else can," he added.
By far the biggest challenge in the program was trying, and eliminating, the different approaches in order to come up with the one that worked, Meehan explained. The credit union worked with its regular card processor, with third-party processors and consultants, to try to find a way to allow the card program to exist as a "free" or unlimited program while still being as inexpensive as it needed to be to fit the school's needs.
"Finally, we just came to realize that there was just no way to do this as an unrestricted card on a public network and still have it come in at the price it needed to be," Meehan said, "so we had to finally go with a private network."
Once the CU made that decision it turned to a processor who had a previous relationship with the school for help. The processor was able to craft a proprietary network that meshed with the school's systems and the CU's system so well that card transactions in the school show up almost instantly. Because it is a closed system, the cards cannot be used outside the school.
The reaction to the new cards has been strongly favorable with different parts of the school community each praising it for different reasons. Parents like it because it helps them teach financial responsibility to their children while allowing a measure of independence. Students like it because it lets them more easily access their funds and school administrators like it because it speeds up the lines in the cafeteria and the school bookstore as well.
"We love the swipe card program," said Elizabeth Devoy, one of the parents. "We don't have to worry about having cash for lunch money in the morning. Nicole is learning to pay attention to her bank account balance and we really love the people at HAR-CO. They have been so wonderful we switched all of our banking services there. It's amazing how much of a difference truly friendly, helpful people can make in banking."
Meehan said the CU had also capitalized on an opportunity by setting up a table at a new student orientation that the school offers in August each year. Parents attending the orientation are already buying books and signing their students up for other things, Meehan explained, so we fit right in and it's easy to get the students involved.
He added, he hopes that that program idea will spread among credit unions and said that another CU in the area had also expressed an interest in working with the processor to set up a similar program at another area school.
"From our perspective, this is a win-win sort of program that dovetails well with what CUs are trying to do," Meehan said. "We wouldn't mind seeing this program become more popular and widely used among credit unions," he added.
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