U.S. Bank Combines Prepaid Accounts Under Single Product

U.S. Bank is consolidating its general purpose reloadable debit cards under its new Contour Card in a move to capitalize on the growing trend of "family pack" prepaid products.

Such packs offer multicard accounts to help consumers manage their household finances and provide electronic payments options to multiple family members. The Contour Card will replace the bank's Convenient Cash GPR debit card and its teen-focused Buxx GPR card, though existing cardholders can continue to use those products.

"Prepaid is a very simple and straightforward way for many consumers to manage their finances," says Whitney Bright, U.S. Bank's market leader for consumer prepaid.

By combining its prepaid products into one product, U.S. bank improves its chances of turning its prepaid card sales into long-term relationships, she says.

"Any time you're providing a product and increasing functionality and flexibility and giving a consumer something that makes their lives easier and more convenient to manage, then you obviously have a greater likelihood of retaining them as a customer for a longer period of time," Bright says.

Users of the new Contour Card have a primary account and can create up to five subaccounts, each with separate prepaid cards that are linked to the main account. The Minneapolis-based bank says the subaccounts enable consumers to doll out teen allowances, budget expenses and pay household employees like caregivers.

A second card can be linked to the primary account for joint accountholders, and users can select different color schemes for all of the cards in their account.

U.S. Bank will continue to issue a separate Contour-branded prepaid MasterCard that doubles as a student identification card and offers mobile account management and person-to-person payment features. U.S. Bank's Campus Card program — which also has a combined student ID/checking account debit card — is used by more than 60 universities in 19 states.

The new Contour Cards are issued on the Visa network, and U.S. Bank charges a $4 upfront enrollment fee for each card on the account and a $4 recurring monthly service fee. Consumers are not charged additional fees to withdraw cash from U.S. Bank and MoneyPass ATMs. Funds can also be loaded at U.S. Bank branches or by direct deposit, and consumers can use the bank's telephone customer service at no extra charge.

U.S. Bank provides consumers with an online dashboard to track spending and transfer funds between the linked cards. It will also offer Contour Card apps for iOS and Android devices. The Contour dashboard is not linked with U.S. Bank's mobile banking platform, but Bright says there are plans to develop integrate the two.

Competing debit products like the FamZoo card also take a family-centric approach to prepaid and include educational tools to help parents teach their children about money management. Other companies combine prepaid cards with personal financial management tools that target budget-conscious consumers.

By promoting prepaid cards as deposit accounts, these products provide additional services to consumers and help prepaid issuers build loyalty and long-term use of their products.

U.S. Bank offered its first GPR debit card in Nov. 2011, and about half of its GPR debit card holders also have checking accounts with the bank. It's difficult to determine whether the prepaid cardholders who don't have U.S. Bank checking accounts hold accounts at other institutions, but the Contour product provides benefits to the growing segment of banked consumers using prepaid cards, as well as unbanked consumers who use prepaid cards as an alternative to traditional bank accounts, Bright says.

"It's a low-cost product, so it may be that they're making the choice because it's lower-cost than some of the checking alternatives may be in the marketplace," she says.