If you want a debit card, you probably can get one from your bank. But what if you don't have or can't get a bank account?
Hip-hop entrepreneur Russell Simmons, whose businesses range from beverages to jewelry to music, has been working for 2 ½ years to fill that void with a non-bank debit card. It is aimed at the millions of people who manage their finances through check-cashing stores, money orders or cash.
The Rush Visa Card, a prepaid debit card, will be highlighted Friday at a youth-oriented Hip Hop Summit on Financial Empowerment in Miami Beach.
The market for the card is huge. There are an estimated 48 million people who are ''unbanked,'' who can't or don't have bank accounts -- either for personal or cultural reasons. ''If the banks served these folks, I wouldn't be here with the Rush Card. I wouldn't be here without their arrogance,'' Simmons told Business Week magazine two years ago.
At the same time, the Rush card charges stiff fees for its services.
By comparison to check-cashing stores, which can take up to 10 percent of the face amount at some South Florida locations, the Rush card is a bargain. But most banks offer debit cards for free or for lower fees.
''We're trying to do programs to educate people, to change people's patterns of behavior. To get people out of check-cashing lines and to manage their credit better,'' Craig Marshall, president of UniRush Financial, said in a telephone interview.
The Rush card is a debit card that the cardholder can use for purchases and ATM withdrawals.
It can also be used to pay bills online, to send checks, to receive tax refunds, paycheck deposits or government benefits.
By comparison to bank-issued cards, the Rush card carries hefty fees.
The Rush card has a $19.95 activation fee, a $1 transaction fee and $1.50 for ATM withdrawals. The transaction fee is capped at $10 a month.
''That's higher across the board with respect to the activation fee,'' said Greg McBride, analyst with Bankrate.com. He said a study Bankrate did a few years ago showed that only 10 percent of banks charged an activation or annual fee for a debit card. For those that do, the typical rate was $12.
What's more, ''At banks in many cases transactions are free,'' McBride said. Most banks, he said, aim to make using a debit the same as using cash.
For example, Washington Mutual offers a free checking account with a free Visa debit card. There is no bank charge for transactions or for use of bank ATMs.
Not everyone will qualify for a Washington Mutual checking account, however. A spokeswoman said that Washington Mutual does not check credit scores before opening checking accounts. But it does examine whether the person's name is in ChexSystems, a reporting agency for banks that lists accounts that banks have closed by the bank for such reasons as fraud or multiple overdrafts.
Marshall says even those on the ChexSystems list can get a Rush card.
The fees on the Rush cards do add up. A typical customer pays $108 a year in fees, the company says, for the average of six transactions and two ATM withdrawals a month.
With 500,000 Rush cards in circulation, if each cardholder does only two transactions and one ATM withdrawal a month, cardholders could be paying a collective $1.75 million a month or $21 million a year.
Bank fees also add up, Marshall contends. There really is no such thing as free checking, he said, ''because those banks are expecting the individual to bounce a check.'' His card doesn't charge a fee for a negative balance.
Banks charge $10 billion a year for overdraft loans, according to a recent report from the Center for Responsible Lending, a nonprofit watchdog group. Bounced check fees tend to range from $20 to $30, as well, the report said.
''I challenge anybody to take everything out of their wallet -- all the cards -- and try to survive,'' Marshall said. ``First and foremost, our goal is to get people back into the mainstream. And maybe then they can move up to traditional checking.''
UniRush is a joint venture of Rush Communications, one of Simmons' many business interests, and Unifund, a Cincinnati-based firm that buys charged-off consumer debt and liquidates it.
http://www.miami.com/mld/miamiherald/news/12126186.htm
Hey I think those with bad credit will benefit from having the card. As much as we would like to think paper is very soon it will be no good anymore.
This reminds me of a story when I went out on a date with one guy and the other guy was trying to hit on me. Enjoying the attention, both these guys starting talking about what they had to offer. The one I was with pulled out a nice wad and placed it on the table and said what you got? Can you beat this? and the other guy pulled out a platinum visa and said this is what I got. Good credit. Bottom line is without credit in todays world, all that cash stackin and flashing is not going to get you any where except a phone call from the IRS.
but No Thank You. I'll stick with Wells Fargo.
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