Regions Bank will add a new savings account to its group of alternative banking products and services, primarily to complement its prepaid card. The move falls in line with the rising trend in the prepaid card industry, where providers are offering deposit accounts that are tied to their prepaid card products.
Scheduled to launch in late July, the Regions Now Savings account will only be available to customers that have a Regions Now prepaid card. Some of the account’s features include no monthly fee, no minimum balance requirement, a 1% annual savings bonus based on a consistent monthly deposit of at least $5 ($100 annual max) and a $1 bonus in every month that at least $5 is deposited and no withdrawals are made.
The Regions Now prepaid card carries a $5 monthly that can be avoided with a $500 monthly direct deposit.
Like all other savings accounts, the Regions Now Savings account is subject to the six-withdrawals-per-month limit. Currently, the Birmingham, Ala.-based bank does not pull ChexSystems reports when consumers apply for checking or savings accounts.
A Regions Bank spokesperson declined to share details regarding service fees and interest rates, citing the possibility for changes in the weeks leading up to the launch.
The new savings account joins a suite of products and services, including a prepaid card, check-cashing, bill payment and money transfers, offered by Regions Bank as a way to serve a broader range of consumers — including the underbanked population. The Regions Now Banking suite was first tested in July 2011 and was rolled out to all bank branches in March 2012.
“Taken together with the check-cashing services it is offering with Chexar, Regions appears to be the first bank to launch a true suite of services to attract consumers who have heretofore eschewed bank relationships,” said Jim Wells, president of Wellspring Consulting, a firm on a mission to expand financial services to the unbanked and underbanked.
Regions Bank’s decision to offer a prepaid-linked savings account follows the footsteps of other major players in the prepaid card market. NetSpend, H&R Block and Mango Financial also offer savings accounts that are tied to their prepaid cards.
“Given the tens of thousands of prepaid debit card programs in the U.S., the industry should be ashamed that you can count on one hand the number of programs that provide a savings option for cardholders,” Wells added. “It looks like [Regions Bank] may have realized that prepaid card-based accounts for low-balance, non-traditional, transaction-oriented consumers costs a lot less than demand deposit accounts, and they are willing to pass some of the savings onto customers.”