Rushing into the Land of Float

January 24, 2012

Playing the float. It's the type of financial gamesmanship most of us have undertaken at least once, especially those of us who are old enough to remember shopping with checkbooks in hand. Certain that a paycheck will post their checking accounts on Friday folks write checks or draw down funds by debit card Thursday after work, for example, with a fair level of confidence that their accounts won't be overdrawn in the morning.

It's not as easy to do today as it was say 15 or 20 years ago. Advances in technology and regulatory pressures have combined to squeeze float out of the payment system.

Now there's a prepaid card company offering its cardholders - largely unbanked and under-banked consumers - the privilege of being able to draw down Direct Deposit funds up to two days early.

It's like free overdraft protection. And it can be likened, too, to playing the float.

RushCard, the brand behind this new prepaid debit card feature, describes it as an alternative to over-priced payday lenders. "Our members can now enjoy increased flexibility and peace of mind knowing that RushCard will help them meet any financial challenge," said company founder and entertainment mogul, Russell Simmons, in an announcement earlier this month.

Simmons launched RushCard back in 2003 as an option for mainstreaming  underbanked unbanked Americans. The card has added over time a robust set of features that make it seem more like a bank account than a plastic nonbank payment card. These include: comprehensive budgeting tools, online bill pay, money transfer services and a sophisticated cash-back rewards program.

"At RushCard we are committed to helping our customers realize their financial goals," said Rob Rosenblatt, RushCard CEO. "Underbanked and unbanked consumers need innovative financial products and services to help them achieve their financial objectives."

I get it, but question how wise it is to encourage people to draw on funds that technically are not yet in their accounts.

7,000-plus microfinance institutions dot the globe today

_{- World Bank}