Citizens Republic Bancorp Inc. is jumping into the prepaid fray.

Like U.S. Bancorp, Regions Financial Inc., BB&T Corp. and other banks, Citizens is expanding the alternative financial products it offers to underbanked consumers who don’t have or don’t regularly use traditional bank accounts.

Citizens rolled out a general-purpose reloadable prepaid card in late November, and its chief executive says it has more products on the way (see website).

“We saw an opportunity in our marketplace. We serve a lot of markets that are not growing and that are not the wealthiest markets in the U.S.,” CEO Cathleen Nash said in an interview last week.

Underbanked consumers “still need banking services, and quite frankly you walk into a Wal-Mart and see where people are doing their banking,” she adds. “Can we turn people into clients that aren’t clients?”

Citizens also recently unveiled a payroll card program and plans to launch a special reloadable card for families and teens in April, Sherry Forbes, chief marketing officer at Citizens Republic, said in a separate interview last week.

Both Nash and Forbes declined to go into detail about additional alternative banking products Citizens Republic is planning, though they said more are on the way later this year.

“We would like to be able to offer more [products and services] that would satisfy more of the unbanked and underbanked population,” says Forbes. “We think we’re a logical place to complete a lot of those transactions.”

Bank executives are hoping that some of their existing customers also will find reasons to use Citizens’ new prepaid cards.

“We saw a little more utility beyond just serving [the] underbanked,” Forbes says. “We’re still learning about various uses that people have in mind for this product.”

For example, some customers have said they will use the cards to help stay on budget and for added security with online shopping, she says.

So far, the reloadable prepaid card has been attracting strong interest, Forbes says, declining to provide specifics.

“We’ve really been pleased with the adoption of it in our branches,” she says. “They’ve exceeded our expectations in terms of card volume and sales. The majority of our branches have had some sales, and we didn’t go out with this as a free product.”

The bank charges $3.50 to issue the card plus a $3.50 monthly fee. Withdrawing cash at a non-Citizens ATM costs $2, and a replacement card costs $5. Reloading or withdrawing cash at a Citizens Republic bank branch or ATM is free.

“We actually did a lot of research on the fees,” Forbes says, adding that the bank studied the fees of other prepaid card companies, including Green Dot Corp.

“Then we looked out to see, are there other banks in our footprint offering a reloadable card? But we really couldn’t find any,” she notes, adding the bank also assessed the offerings at BB&T and Capital One Financial Corp., which both offer prepaid cards.

Citizens, which is headquartered in Flint, Mich., has branches in Michigan, Ohio, Wisconsin and Indiana.

The bank also looked at how Wal-Mart structured its fees. The retailing giant sells prepaid cards for $3, with a $3 monthly fee, slightly cheaper than the new Citizens Republic cards.

The bank thought it could charge slightly more than Wal-Mart because customers would be able to load funds at Citizens branches and withdraw money at Citizens ATMs at no charge, Forbes says. Loading funds onto a card account at a Wal-Mart store costs $3, and ATM withdrawals are $2.

For that convenience, “we thought we could probably charge a little bit higher, but yet we’re still fair,” Forbes says. “And we’re covering our costs.”

The bank is working with processor FIS Global to support the cards.

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