Credit Cards Online Information

University Bank in St. Paul, Minn., has introduced a stored value card designed to serve unbanked and under-banked consumers. Bank officials also expect it to be useful for college students and consumers looking for safer e-commerce transactions. The stored value card, which the bank is calling the "University Personal Cash Card," features many of the benefits of cash and credit cards without the requirements needed to open a bank account - such as a government-issued ID or a minimum balance. The cards function like a pre-paid retail gift card; they can be used one time and discarded, or money can be re-loaded onto the cards for continued use.

University Bank President David Reiling said the new cards might be used, for instance, by recent immigrants to the Twin Cities who don't have traditional bank accounts because they lack proper ID, money to maintain minimum balances, or the ability to communicate in English. The new card will allow people to deposit their paychecks directly onto the card and avoid check-cashing fees. They gain the security of not carrying cash, plus nationwide access to cash through ATMs.

Reiling said his bank, which is located in an area populated with immigrants, turns down four out of five new account applications because the applicants can't meet minimum requirements.

"We also found out through our check cashing service that there are some people who simply don't want a bank account," Reiling said. "We wanted to offer a product that met them in the middle. This card, in the long run, will help them become more comfortable with financial institutions."

On paper, the cards look a lot like bank accounts. From a regulatory standpoint, however, Reiling said several differences take them out of the account category.

"It's about as close as we could come to getting something to look like a bank account without actually being a bank account," Reiling said. "For starters, the money on the cards is not FDIC insured. You cannot overdraft these cards. Once their value is depleted, that's it. The cards themselves carry no personal information about the carrier. They break the chain of identity theft."

The stored value accounts can be opened without a state-issued ID. Reiling said the bank will follow the standards laid out by the USA Patriot Act, although rules about stored value cards aren't specified in the act. As for regulatory requirements, the new cards have yet to be fully scrutinized by regulators.

# posted by Medical Information : 4:34 AM