NEW YORK (MainStreet) — Russell Simmons is cutting fees on his prepaid RushCards.
His company said Wednesday that fees for bill pay enrollment, individual bill pay transactions, plan changes and replacement cards will be eliminated starting in February. Additionally, the fee for card-to-card funds transfers between RushCards will be reduced from $2.95 to 99 cents.
The $9.95 monthly fee associated with the card – which has received some criticism from industry experts – will be lowered in March under a plan that charges a $5.95 fee to consumers who choose to get their paychecks through direct deposit and a fee of $7.95 to those who do not. Both options entitle the customer to unlimited signature and PIN transactions. That brings the annual total of monthly fees down to as little as $71.40 from more than $119.40 originally.
RushCard CEO Rob Rosenblatt said the fee structure was made possible by the company’s rapidly increasing customer base.
“As we continue to expand, we’ll continue to innovate, providing valuable products at affordable prices while maintaining our commitment to providing great service and clear, transparent disclosure of all of our fees,” Rosenblatt said in a written statement.
The announcement comes at a time when the prepaid debit card market is heating up. Earlier this month, Suze Orman launched a low-fee card that provides its users with credit monitoring services furnished by TransUnion, and major issuers such as American Express (Stock Quote: AXP) and Capital One (Stock Quote: COF) added low-fee prepaid cards to their arsenals in 2011.
Amex’s card does not carry a monthly fee, while Orman’s Approved card’s monthly fee is $3 or $36 annually.
In an interview this month, Simmons said he was considering offering 5% cash-back rewards and alternatives to payday loans to users of his RushCards as part of future rollouts.
A goal program offering cardholders the opportunity to earn $2 back for each month they maintain a balance of $500 or more in subset savings accounts and a service that allows those with direct deposit to get paycheck funds two days early are already available to RushCard users.