Economic pressures abound, forcing consumers to get creative to save money. Union Privilege, the consumer benefits arm of the AFL-CIO labor union federation, got creative too by including a savings account feature on its new Union Plus prepaid card.
"Workers and their pay checks are really being squeezed in this economy," said Leslie Tolf, President of Union Privilege. "We have 13 million union members and 3 million retirees who are looking for alternative ways of paying in this society. … And we said, what can we provide that's different than what's out there?"
The card, launched in July 2011, offers a 5.1 percent annual percentage yield on balances up to $5,000 and is being used by members of 63 unions as alternative bank accounts, Tolf said; members are depositing pay checks onto the cards and then directing portions of those funds into the savings account bucket.
"It's a very powerful financial empowerment tool for our middle-class members as they struggle to save more for their retirement and their kids' educations," Tolf added.
Union Plus cardholders are typically lower middle class economically and work as bus drivers, janitors, and in hotels and restaurants, Tolf said. They also often lack access to bank accounts and lines of credit, which accounts for one of the prepaid card's primary functions, as a tool for reaching short-term savings goals.
"People are saving for the next event, whether it be their kid's wedding or the refrigerator that they have to replace," Tolf said. "And it's just a nice way to put the money in a flexible situation. You're not having to park it at Wal-Mart or park it at a bank."
A second population of users are employing the card as a debt management device. "Many of our members don't want to be in the credit card world anymore," Tolf said. "And this is a way for them to discipline themselves around how they budget."
A third category of user are parents with college-age children. With companion cards farmed out to children, parents load the cards with cash and then track the spending of their children away at college.
Basic bank accounts are getting more expensive for consumers to maintain. With reduced debit card interchange revenues due to implementation of the Durbin Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, some banks are starting to charge consumers fees on formerly free checking accounts, even adding monthly maintenance fees for the use of debit cards. Such fees can erode the precarious account balances of people living paycheck to paycheck.
In August 2009, The Financial Times reported that U.S. banks were on pace to make $38.5 billion in overdraft fees that year. On the other hand, prefunded prepaid card accounts are by definition overdraft resistant, Tolf said.
Inter National Bank is issuing the Visa Inc.-branded cards, and Rev Worldwide is processing them. Some of the card programs are being co-branded by particular union affiliations. For example, the American Federation of Musicians recently launched its version of the Union Plus card for the direct deposit of not only payroll but also royalty payments. The card is expected to be especially helpful for traveling musicians. 
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