CRAIG MARSHALL
‘Full suite’ of services
For the unbanked individual with no access to credit or debit cards, help is on the way from hip-hop rap mogul Russell Simmons and his California company, Rush Communications.
The 3-month-old bank card is being offered by UniRush Financial Services to consumers “forced outside of traditional banking institutions” in an attempt to teach those with bad banking and credit history how to save and spend wisely. “Unbanked” is a term applied to those without bank accounts.
UniRush Financial Services, a new venture between Rush Communications – the media conglomerate founded by Simmons – and Cincinnati-based Unifund Corp., a leading buyer and seller of distressed debt, recently announced its new Rush Prepaid Visa Card, or RushCard.
The card is offered to “distressed” Americans who have bounced too many checks, overextended their credit or have had accounts closed due to unbalanced activity, said Craig Marshall, chief operating officer of Rush Communications.
The RushCard is funded by a client’s money deposited on the card, giving the client the ability to spend only what is available on the card, said Marshall.
With a pool of card users in Boston, New York, Detroit, Atlanta, Baltimore, Chicago, Miami, Los Angeles and Washington, D.C., Marshall said the goal of UniRush is to “open or reopen a world of possibilities … and assist in mainstreaming these individuals back to creditworthiness and traditional banking relationships.”
Still, he added, there are more pressing issues for consumers than accessing the available money in their bank accounts.
“Even though you put a card in someone’s hand, there are bigger problems. [Consumers] either don’t have bank accounts or aren’t putting money into accounts,” said Marshall. “The key would be to get people on the direct-deposit end and load the card with their paycheck money.”
Marshall said the prepaid card’s direct-deposit option would make money available to individuals faster and easier.
And by utilizing that option, he noted, clients “are not waiting in line or taking off work to pay bills, and have the luxury of renting hotels and shopping online,” because the money is readily available on the card and boasts the Visa logo, which Marshall said is a necessity in today’s buying marketplace.
“[The card] is a great idea for those who don’t have bank accounts and it’s better than them receiving a subprime credit card with high interest rates,” said Marshall. “It’s a good way for someone to curb what they’re spending.”
Employees and other workers electing to have payroll deposited onto the RushCard are provided the ability to immediately use the funds without the cost and delay of cashing checks. Approximately 12 percent of bank account holders do not receive a debit card and are denied easy access to their funds, according to Marshall.
According to UniRush statistics, nearly 48 million Americans have been forced outside traditional banking systems and cannot have a checking account and of that 48 million, nearly 19 million have an average income of between $10,000 and $22,500, but do not have a traditional checking account.
‘A Different Angle’
According to a 2001 analysis by the Independent Community of Bankers, non-interest checking accounts, on average, charge annual maintenance fees of $103.68. Those fees are before overdrafts, which many with lower incomes use at an average $22 per transaction, said Marshall.
The RushCard comes with a $19.95 activation fee, no monthly maintenance fees, no minimum balances, a $5,000 balance limit, two free checks every month, a $1 per transaction fee and $1.50 transaction fee for ATM transactions.
Additionally, Marshall said the card would not be linked to a traditional retail bank account, there is no need for employment verification and there are no fees for over limit transactions.
“We are working with a number of organizations, including Fannie Mae and the Acorn Group, which advise individuals of better opportunities available for them,” said Marshall. “Our eventual goal is to get individuals back to savings and drive people back to the banks.”
Jim Moynihan, a bank analyst in Advest Inc.’s Boston office, said this type of card is the answer for a consumer with poor credit history.
“The banks should be thinking about this and probably be doing something similar,” said Moynihan. “It’s really something different and something worthwhile and necessary.”
Marshall said a nationwide savings plan offered by UniRush, in collaboration with banks in various cities around the Northeast and on the West Coast, would be announced in the upcoming months.
“We have had discussions with a number of banks in the [Boston] area,” said Marshall. “It’s a relatively new program and we are pursuing a number of different angles to get people back into the banking mainstream.”
Marshall said the focus of the card is on the empowerment of the individual who has been denied bank access and help to transition with them until they are creditworthy.
“Every business that Rush Communications enters has the philanthropic component to it,” said Marshall. “The future [goal] is to build a cardholder base and offer a full suite of cardholder services.”
Chris Viale, general manager of Cambridge Credit Counseling in Agawam, said the pre-paid debit card is a “great way for people to learn credit counseling without going into debt.”
“There doesn’t appear to be a downside for the unbanked consumer,” said Viale. “It’s a good way to get people in the habit of spending only what they can afford to spend.”
Melanie Nayer may be reached at mnayer@thewarrengroup.com.
