Amid growing competition from non-banks, BB&T bank, which has locations primarily in the southeastern and mid-Atlantic U.S., is now offering a new prepaid checking account which comes with a Visa-branded debit card.
The new account announced on Wednesday is targeted toward individuals who are unbanked and underbanked and is designed for individuals who do not qualify for a traditional checking account. BB&T is touting the account as a cost-effective $10 flat-rate alternative to competitors who charge fees for each time a service is used.
Competition has been growing in the non-bank financial services field in recent years. Walmart, the nation's largest U.S. retailer, began offering prepaid Visa-branded debit cards four years ago, and also offers money transfers, bill pay services, credit cards, in-store check cashing.
The BB&T MoneyAccount - as the prepaid transaction account is branded - is seeking to serve individuals who don't qualify for a traditional checking account.
The account features various unlimited features, including free cash withdrawals and inquiries, free direct deposit, free online banking and bill payments, free mobile banking and alerts. It costs $10 per month, or $5 per month if individuals deposit more than $1000 per month.
Account holders can only spend money which has been deposited and BB&T says the account eliminates the risk of overdraft fees.
Unbanked individuals do not have bank accounts, while underbanked individuals have a checking or savings account but rely on alternative financial services.
The FDIC (Federal Deposit Insurance Corporation) - the government regulator which insures and examines banks while also managing failing institutions - says underbanked households have used non-bank money orders non-bank check-cashing services, payday loans, rent-to-own agreements, or pawn shops at least once or twice a year or refund anticipation loans at least once in the past five years.