Walmart's effort to get customers to build up their savings accounts(theatlantic.com) |
Walmart's effort to get customers to build up their savings accounts(theatlantic.com) |
These cards charge 5 bucks a month, plus like 3 dollars to deposit cash, 3 dollars to withdraw cash, in addition to the 5-10 dollars up front for the card itself.
Because of this, a person using this type of card can easily spend $100+ a year on fees. Not exactly a great way to save money, and hardly better than overdrafts.
If at all possible, people in this sort of situation would be much better served by joining a credit union. While there are some drawbacks in terms of hours and atm availability, many CU's do not charge overdrafts and also have some form of atm reimbursement. This, along with the ability to deposit checks by snapping a pic with your phone make them a viable, and preferable alternative. Sadly, they are not as prominent, nor well advertised as the sort of cards peddled by Wal-mart, et. al.
It is $5/mo for accounts with less than $1000, but you're not going to get better than that at a bank.
More importantly, they aren't pulling the overdraft scams that banks are. The example right here is that the customer in question pulled $100 in overdraft fees over a $4 purchase, with a traditional bank card.
That might be true of the big national banks with a branch in every town small and big alike but it's not true of the smaller local banks and credit unions. My checking account at my credit union is free as long as I maintain a balance of at least 5 dollars. It has branches in the area with decent hours, it has an excellent online banking site, it has excellent customer service. When I walk in to do some business I'm not bombarded with sales pressure to waste my money in exotic types of accounts that the credit union offers that do more for the bottom line of the credit union than for me. If I travel across the country I can access my money through a national network of similar credit unions without paying any fees.
To my understanding this is extremely common among credit unions in other areas.
Oh and to reply to one of your comments below, my credit was extremely poor when I opened my account. I received nothing but highly professional customer service regardless.
I just checked and my CU has a $30 overdraft fee, which can be disabled if you're willing to let things bounce.
Sure you are. I have many accounts with less than that. Don't spread FUD.
Overdraft fees are easy to avoid if you just tell them to decline overdrafts.
What's the benefit of personal banking through an actual bank over a credit union? I see none currently except it's a bit more difficult to send/receive money internationally through mine (I'm fairly sure it isn't all CU's that have this issue).
A simple google search for free checking account gave me 20+ such banks in the first result.
What? It costs money to lend your money to the bank in the US?
Seriously though, these cards, like many "financial products" come with a variety of price points and fee structures. If you re-read my comment, you'll see that I didn't claim my figures were definitive, but they are definitely in the ballpark.
The only cash machines that charge over here that I've seen are rented ones at packed events (clubs, concerts etc).
It is certainly possible to pay for those services, but it's not normal. Some people let it happen out of laziness, or due to not being aware that they can do better.
We do have a fees problem, but it's mostly with other services. For example, many banks will charge some outrageous amount (like $5, outrageous compared their cost) to give you an electronic copy of a past bank statement. High overdraft fees are common. If you accidentally use your debit card to make a purchase that exceeds what you have in your account, the bank will often charge you a ~$35 fee rather than reject the transaction. This is optional, but they push it hard and sell it as a "service," since it means you're never left unable to complete your transaction. Never mind that being out a bunch of money is bad too.
Even worse, some banks (at least for a while) would intentionally maximize your overdraft fees by sorting your transactions on any give day from largest to smallest before applying them. For example, imagine if you have $99 in your account, and you use your debit card to make purchases, in order, of $1, $1, $1, and $100. The last transaction should overdraw the account, hit you with a $35 fee, and your balance will be -$39, right? Wrong! They'll run the $100 transaction first, overdrawing the account, and then run the $1 transactions on the overdrawn account. Net result: four $35 fees and a balance of -$144.
So yes, many of our banks suck, especially larger ones, but it's not quite as bad as everyone paying to withdraw and deposit.
FREE CASH
Of course that unfortunately only means that you're not charged for the withdrawel, but the cash doesn't really come free.
But withdrawing and depositing money is a service that costs the banks money to do doesn't it? I'm can see why you don't like but I can't see it as morally 'disgusting'.
Would you look after someone else's meagre current account for them, and give it back on demand, for free? I wouldn't.
I don't really know who covers that cost in the UK. It's certainly not interest they earn lending out our savings is it? Especially this type of customer since they have no savings because the point of the card is to encourage them to do so, and since interest rates are so low.
Who is paying to cover the costs of a basic bank account of someone who doesn't save? I've no idea.
It also ties in to how banks are regulated. Now again, I'm not super well versed in the history here, but as I understand it, after the stock market crash in the 20's, congress passed the Glass-Steagall act which, among other things, said that the banks either had to be an investment bank, or a commercial bank, but not both. That way the commercial banks, which are holding regular folks money, can't gamble it all away. That seemed to work pretty well, so much so that congress was later convinced to repeal large portions of Glass-Steagall.
Once that happened, investment bank culture, which never really left commercial banks, once again came to prominence, along with it's emphasis on making money for shareholders.
The reason I mention all that is to say that during Glass-Steagall commercial banks had to go back to making money slowly but surely through giving out safe loans and charging modest fees for basic services. In the meantime, their shareholders, having had a taste of the large dividends generated by investment fees and the like, came to expect more than the safe, modest returns commercial banks used to provide. In order to appease investors, commercial banks then had to look for other ways of generating profits. That's where things like atm fees, excessive overdraft charges, monthly checking account fees, and the like come in.
The fees and stuff actually got so bad that congress passed a law mandating that the banks had to allow people to opt out of overdrafts, among other things. Unfortunately, this law had been kicking around for several years by the time it got passed, so the banks had plenty of time to weaken it and/or find work arounds. For instance, where you used to get a single overdraft charge for each time you overdrafted, many banks went to a system where you got a daily charge for every day your account was in the negative. I've literally seen someone crying in the bank upon being told that what should have been a single $40 charge had grown in the course of a week or so into a $400 charge. Sadly, this is just one of many such examples of how commercial banks have changed their practices to prioritize profits over public service.
Hope that all made sense. As I said, I'm not a historian, and a lot of the stuff I discuss is widely debated, but if you find it interesting there's a lot of good info on wikipedia and youtube, not to mention your local library. :)
During Servon’s research working as a teller at a check
casher and payday lender, consumers told her that the fee
structures of nonbank alternatives were more transparent
and predictable than those at conventional banks—crucial to
anyone living on a budget.
Prepaid cards offer this predictability, and over time
their reputation for transparency has improved.Obviously each CU is different, and I can't really speak to the specific terms that each one offers, but overall they seem to be more attractive than the terms offered by the large chain banks and the payday lender style banks that originated the style of debit cards discussed in the article.
I was under the impression that most people using these cards were using them because:
a) They distrusted banks because of a prior history of being screwed by them, or
b) They were unbankable because of a ChexSystems report preventing them from being able to open a traditional bank account.
Is this not the case?
Sam Altman's startup (Loopt) was acquired by Green Dot (the company behind the WMT Money Card) back in 2012.
Many of the GoBank features mentioned in the article (Stash/Vault, Fortune Teller) came directly from Steve Streit (Green Dot CEO), acqui-hired Loopt employees, backed up by IDEO research that was commissioned by Steve several months before the acquisition.
I was working there at the time Loopt was folded in, and was lucky enough to more or less report to Steve. I can tell you he really is deeply passionate about the underbanked community. I saw him fly into a fit of rage when a major outage prevented customers from accessing their funds for a brief time ("Don't f*ck with my customers' money!").
Say what you will about the fees, but these prepaid cards are a very convenient lifeline to many people who would otherwise be shut out of the system.
On that subject, an interesting result of that lack of access is the existence of subprime retail, Bluestem Brands being a big example. Companies like this were able to coexist with Amazon because they're willing to extend credit to people who can't get a debit/credit card to pay at Amazon. The tradeoff is, of course, higher prices (~30% price difference compared to Amazon in many cases). The increasing prevalence of prepaid cards is definitely a net positive in my opinion. It's reducing an artificial inefficiency in the market and helping those on the most precarious rungs of the economic ladder.
Disclosure: I currently work with Amazon and used to work with Bluestem. I don't speak for either.
Gaslighting. They're in the poverty class but that sounds bad to people propagandized to believe they're middle class. You're not poor, you're just a temporarily inconvenienced millionaire and you should base all your political decisions and worldview on that rather peculiar belief.
They're middle class, the same way I'm upper class nobility because I was awarded a college degree complete with a title of "Bachelor of CS". Some guys are titled "Duke of York" some guys are titled "Bachelor of Computer Science" no big difference. I hold a title to property, sure its only an acre of suburb land not a hundred thousand acre barony, but whatevs, I'm practically landed nobility. Only people with a title as distinguished as mine are allowed to hold corporate positions such as mine, we can't have a mere untitled commoner writing programs now can we? Or would you prefer to hear a nice rant on who is the real nobility of the glorious and ancient title of "engineer" and who is a mere pretender to the throne?
USA is full of gaslighting top to bottom.
I have a very hard time believing that anybody believes this
what's wrong with this picture? in any case, i suppose this is good -- in the same way a slave owner providing food and shelter is good for the slave. you even have to pay to deposit and withdraw money.
People with low incomes make rational spending choices. By offering a financial incentive to use the vault, Wal-Mart is trying to make saving as attractive as another possible purchase. Borrowing your language, saving becomes a difficult choice instead of an easy choice not to save.
For some people it's that simple, for others working out what they need and when they need it is more complicated. Advertising is a multi billion dollar industry based around convincing people they need certain things or certain brand names.
I'm sure we've all met people that spent more on electronics than they really need to browse facebook, or dealt with customers that need to be coached on what they need.
So... they are not benefiting. They are losing out on interest and a real bank account, and Walmart is seducing them to stay with a lottery.
They are perfect solutions for the poor and underbanked... whatever that means. Small fees, small charges, impossible to rack gazzilion dollars in penalty fees.
This is absolutely not how one should encourage people to save. This is Walmart trying to steal business from local banks/and or provide banking services to people in rural locations. Personally, I think Walmart should offer this at zero-cost to help their customers live with less financial vulnerability (and thus shop more at Walmart).
Full disclosure: I work at a startup that's using prize-linked savings to help encourage people to save money, but we don't charge a monthly-fee and we actually give our users interest on top of what they win.
Ok if the local banks are serving their communities well then why would Wal Mart even have a market opportunity here? Clearly local banks aren't serving the community or else Wal Mart's efforts would be redundant.
You are correct though, local banks aren't necessarily helping people save either, especially those who are living paycheck to paycheck.
Many regulars that load already save. Cash. They need a card for certain purchases. They load the exact amount.
They load sometimes, with a debit card- which signals a bank account.
They purchase other items with cash and govt assistance debit card. They save their cash...
All the loadable cards (bluebird, visas, vanilla, greendot, etc) are only a part of a families toolchest of payment options.
The image of the totally poor person loading a card is not my reality.
The article states this as fact. Seems wholly bogus, but perhaps I define middle class weirdly. I think of it as robust stability moreso than income earned. Anyone know a plausible source for the assertion?
Regardless of income, by definition, the middle class should always average out to basically break even unless we are in periods of rapid growth. This should happen because their willingness to pay for food and shelter is determined by what they make and eventually prices will catch up to income if income doesnt grow.
I imagine the concept I describe can better be explained by an economist.
How are people using checks to pay for coffee? I haven't been able to use a personal check for anything other than rent during my entire adult life.
The point I'm making is has anyone here, anyone, used this?
Because I have some questions. At my employer they get a commission for signing up which comes out of the fees and my employer likes money, so they have tables at the care fair and had salespeople visit each department trying to convince us to let them pay us via a highly fee'd VISA networked debit card instead of "old fashioned" direct deposit to my checking account.
But what I don't understand, and probably should have asked the HR lady and salesperson when they put on the show, is how does this even work day to day? Like I probably don't spend more than $1K retail in total per month, mostly food. And I usually spend on average less than $1K per month online shopping (computer hardware, clothes, just "stuff"). Most of my pay goes into non-credit payable bills. I have a bunch of bills that do ACH direct withdraw from my checking, I hand write 5 paper checks per year, 4 to the water utility that won't online or direct bill because their whole system is like something out of the 60s, and 1 to city property tax but I must pay 5 or 10 bills per month using checking. I'm old enough that I remember in the 90s writing like 10-20 checks per month, now I write like 5 per year LOL, I have two boxes of blank checks which absent the Singularity means I literally have a supply for the rest of my natural lifetime.
I don't even ... how do you ... so lets say you've got a prepaid VISA with say $15K to $20K added per month. OK. Now how does one pay rent when my bachelor pad only accepted checks? All that stuff, none of it accepts credit card payment. I don't even know how I'd pay my water bill. I could mail them a money order if I could get a money order using a VISA card but I don't think that's allowed. I sweep money to an investing account once in awhile and for better or worse the brokerage won't let you gamble by paying via credit card.
My local independent chain supermarket doesn't even accept credit cards because of processing fees, so I'd have to withdraw cash from the (pay) ATM then pay cash for my food, so I couldn't even directly pay for food. Or I'd have to buy all my food at the gas station convenience store which sells no produce nothing fresh, only cooked hot hot dogs and pop tarts, but does accept credit cards? The weekly farmers market is cash only.
How do those cards work in practice for adults with adult expenses? Being poor is apparently very complicated. I can't pay most of my bills with one of those cards, at least not as I understand how they work.
I've also worked in conditions where I lived in a 1/4th of a trailer with a half-height locker and whatever I could keep in my top bunk with me -- I shared the space with another adult. I had a few sets of clothes, a jacket, no internet or useful entertainment and 3 shipped in boxed cold, marginally nutritious meals per day. I didn't die and I'm sure I could lose many of those "luxuries" and still not die.
Once when my parents made some bad financial bets, we ended up homeless and living in a motel. It turns out a family of four really can live in space not much bigger than a foldaway bed, a small bathroom and a hotplate. Amazingly, even after months of this, none of us died. I'm sure we could have gone even more spartan if we had needed -- maybe share the bathroom with a few other rooms? Combined instant noodle hotplate cooking area with some of our neighbors? Why do we need heat, just wear more clothes! Don't need a/c, just wear less! Don't need heat or a/c, don't need electricity then, use a butane stove instead of a hotplate! I guarantee, we wouldn't die.
Humans need remarkably little. Most humans would get along just fine with two sets of clothes, a marginal blanket and a decent cold meal of daily calories every day. And yes, they'd get along for quite a long time like that. It would be a wretched, terrible existence, but "need" doesn't leave room for pleasantries.
Defining 'human needs' as 'the minimum set of requirements not to die' isn't just laughable in that it's archaic to the point of being absurd, but it's also undermined by your narratives. Take your blinders off, and in each of your examples given here, you'll find that you were in all situations deeply dependent upon social goods (infrastructures and supply chains) that you've glossed over.
Assuming you were living in an ostensibly "first world" society, I'd guess most people are unsettled by the sense that your experience was both sadly typical and economically inexcusable, which is the likely context for many criticisms of the article's subject.
EDIT: updated comment
one is forced to drive over an hour all in all, or pay $3 (not even counting $1 to get the card, $5 a month fee on low balances and $2.50 to even take money out of the card) and have further dependence on megacorp.
original comment, for integrity (thanks to the child posts, ajdlinux and greeneggs):
a 45 minute drive and the associated time and money wasted (not to mention car depreciation), on top of a $3 fee. oh, drove 45 minutes? might as well buy something, lest that time be wasted. oh, and you're going to have to drive 45 minutes back. all in all, an hour and a half wasted in addition to $3 (not even counting $1 to get the card, $5 a month fee on low balances and $2.50 to even take money out of the card) and further dependence on megacorp. if you read this and your first thought is: 'hey, most people aren't 45 minutes away from walmart', then my point is already lost on you.People who didn't have savings have some now, and they aren't all going to blow it at WalMart because they saw an advertisement. These people are better off than they were before, and I'm not going to oppose that just because I don't like WalMart.
I'm 26, and I've never written a cheque. Public schools over here have (or at least had, not sure how it works today) programs where every student would get a bank account in the first grade with no fees (until they finished study). You'd actually bring in your bank book and deposit money (you did have to visit the branch to withdraw with a parent to sign for it). Once you reached 13 years, you could get a debit card (this was 2003 for me), and then I got Internet banking when it started getting popular in 2006 (I was in the 10th grade). Internet transfers have pretty much always been free and are usually overnight (or immediate if it's to another account at the same bank).
By the time I graduated University, and would have had to start paying fees, the state of bank competition meant that it was pretty rare for any personal banking to charge fees. I now have three personal transaction ('checking') accounts and two savings accounts across two different banks, and none of them charge fees (My company account is the exception, at $10 a month).
Pretty much everybody here has bank accounts, so cheques are pretty much unheard of (mostly used by people over 60), everybody is paid into bank accounts, you pay taxes and bills electronically, etc... Surely it's similar in Europe? The US just seems like a different world.
I think those are actually promotional programs run by the banks (but I agree they're a good thing). I'm 10 years older, but we were all given Commonwealth Bank Dollarmites accounts. There's more info on the Dollarmites program here, apparently schools get affiliate fees & commissions for every deposit the children make ($5 for every account opened, 5% commission on every deposit):
https://www.commbank.com.au/personal/kids/school-banking.htm...
> the state of bank competition meant that it was pretty rare for any personal banking to charge fees
That might have changed, last time I checked the major Australian banks all (except NAB) charged a $5 monthly fee, unless you agreed to setup an automatic monthly deposit of at least $2000. You used to be able to get fee-free accounts so long as you maintained a minimum balance level.
I explained it to Korean coworker that our debtors prison is implemented as a house arrest or like an economic parole release.
So if you owe child support because you're unemployed you can't use a bank because the money would disappear. You can't get money from a job in the system it would disappear so cash pay please. Or you can't go to the courthouse and get it fixed because lawyers cost money and see above you're unemployed. Once you're in debtors prison there's a whole bunch of things you can no longer do, just like being under house arrest or parole. For example, for a couple decades 90s-10s we had universal default as a stated written policy. We still have it, just unstated, which confuses foreigners. On paper we don't have universal default since 2010 or so. In practice we still have it today, more or less.
Adding to the complexity we do have actual debtors prisons most famously in the rural south but to some extent or another there are some everywhere.
I guess another way to explain it is part of our culture is explicit and written and people read it, like generally speaking the bible or the -ez single page income tax form. Then there's a layer thats written and people make a great show of not reading like mortgage or car loans or insurance contracts. Next down there's unwritten stuff that people understand like the debtors prison thing is I think fairly uncontroversial and reasonably well informed. Below that there's stuff we kinda unconsciously by osmosis know, like the "unbanked"="house arrest debtors prison" or "underbanked"="financial equivalent of parole complete with abused arbitrary rules". At the bottom there's weird esoteric stuff like non-propaganda related economic theory and history. And the level of awareness is extremely uneven across the entire nation (fairly uniform across subcultures, mostly).
> No overdraft/credit/direct debit bullshit
> to be concerned with
They (the banks) pass the security and processing to the CC systems instead of a unified debit network (that is still around).
When I got my first fancy visa debit i was told if i used it as a debit card, I'd get charged 25 cents, but if used it as credit there were no transaction fees. This was back in 2001-2 ?
I bank with a local(ish) bank that is growing, I have a free checking account and have for a very long time. They've also been really good to be about waiving fees, etc, though part of that is being on a legacy account older than I am. However other friends and family have reasonably similar experiences.
They're also still offering a free checking account: https://www.huntington.com/Personal/checking/asterisk-free-c...
And "checking account" doesn't mean "with this account I write a lot of checks." In the US there are general two types of accounts, checking and savings. I haven't written a check on my US account in over 15 years.. Though in France I probably write a few paper checks a month.
My point is that "checking" account is just a terminology -- the vast majority of people don't write checks (unless you're over the age of 80.)
Of course, the CFPB is looking pretty dead at this point, so who knows what they'll do after Trump dismantles it.
Interest is a waste of time anyway these days. My credit union is paying 0.10% on savings accounts under $100k, and something like 0.25% over that amount. A "high yield" online only account might pay as high as 1%.
Often the poor are poor because of a lack of financial literacy. I've seen it in those around me, and in my own parents. Getting people to save money for a rainy day is powerful. I've started doing microloans to help lift my friends up too, I made it.. and with a little help, maybe I can lift them up with me.
This isn't money that could be invested conservatively - this is money that might be needed tomorrow, or next week, or next month.
There are enough banks/credit unions that don't charge fees that it is more of a way of asking people not to open an account than it is a problem with access to banking.
Using a cash machine is free, for the majority of cases — those in banks, supermarkets, shopping centres, railway stations and so on are run by one of the banks and are free for customers of all banks to use. It doesn't matter if the machine or customer is with/is a major bank or a small one, they're all on the same network and charge the same: £0.
The exception is captive markets. Cash machines within a stadium, nightclub or a convenience store often charge. I've never used one of these, it's so easy to avoid doing so.
Free would be nice but I can understand why banks would charge non-customers fees. If your ATM is in a very high traffic and convenient place, you are going to be servicing and refilling the machine more often which costs more money. If you can control the usage a bit by charging non-customers a fee then you can reduce service costs.
I assume this averages out amongst the large banks, who probably each have their fair share of convenient places. The small banks pay for their customers' convenience; presumably a very worthwhile cost for some of the new banks or Internet-only banks.
I still have the plastic piggy-bank somewhere (and a Fat Cat one, to really date myself).
By the time I went to uni, I had enough saved for a brand new Pentium Celeron system. It sure helped that interest rates were 10-15%…
We're probably a similar age, I met Fat Cat on an Ansett flight once ;)
But clearly customer acquisition at a young age is huge for banks - I'm part of a focus group for Westpac, and recently they tested several different designs for piggy banks.
(Another initiative is already public, where they've giving $200 to every child born in Australia this year. Catch is, the parents have to open a Westpac account to claim it, and the money can't be withdrawn until the child turns 18.)
Commonwealth bank was government owned at the time.
Looks like you're right on fees - I didn't realise. One (NAB subsidiary) doesn't have fees, and for the other two transaction accounts I don't get charged the $4 p/m fee because I have my salary put into the savings account they're linked to.
- It's $1 for the card, not "$5-$10"
- It's free cash withdrawal, not $3
- It's free deposits from direct deposit or government benefits, not $3
You are not approaching this remotely honestly.
As I said, there are a variety of cards on offer, from a variety of sources, but they all seem to fall within the same range cost-wise, even if the fees are structured differently.
It's as if we are arguing about cars, and you want to debate whether the pinto in question had power-windows or not, while ignoring the fact that it will explode in a routine accident.
The precise things you claimed about this card are _not true_. Those are facts. If you want to debate, use _facts_.
Nobody is denying that WalMart _could_, if they wanted to, offer a savings card which is a scam. But also consider their motives going into this, compared to the average bank:
- Wal-Mart's goal is to get people to spend money at Wal Mart. This card makes it easy to spend money at Wal-Mart.
- Banks exist entirely from interest on saved money, and on fees.
Since these customers have very little saved money (the whole point of this article), the money made is entirely from fees, unless you have another reason to get people to use the card. Wal-Mart does -- it is totally reasonable for them to run this program at-cost to attract customers. You cannot say the same for any bank.
If you want to disagree with the merits of people spending money at Wal-Mart, that's a different topic. But the evidence points to this card being a good deal for an underserved part of the population.
It's what you might call a "salary account" in other places then. It's where your pay(check - haha) ends up, and what you use for regular day to day transactions such as paying bills.
I also get confused when abroad and there are buttons to withdraw from "checking" "savings" etc. I have a handful of accounts that I name myself so it's always hard to know.
UK => Current Account
AU => Transaction Account (although my bank brands it as an 'Everyday' account)
The worst thing about US Checking accounts is that they don't come with checks, and you have to arrange with a third-party printer to get a book of checks sent to you.
I just bought a car, and the satellite branch could only give me $1000 in cash. I had to beg the seller to take a cashier's check for the balance.
Sometimes the systems don't integrate well and so they have a hard time figuring out which account is which.
Finally, even though my spouse is listed as a co-owner of the account, there is very little she can do at a satellite branch (or even over the telephone to the main office).
It might, OTOH, be hard with the same kind of bad account history that will stop you from being able to open a regular bank account, but that's different from regular no credit or bad credit.
Background: For the record, it was due to defaulting on a student loan. It's taken care of now, but back then I couldn't afford the 10% interest rate.
Maybe you're a student or have multiple products (different types of accounts, credit cards, home loans, term deposits) with your bank?
I can't get a $0 / month account for everyday banking from my bank because I have a special rate home loan. They have a savings account that's $0 / month but you can only transfer from / to it via a regular $4 / month account.
* http://content.schwab.com/web/retail/public/get-started/chec... - amazing checking account, reimburses all ATM fees
* https://www.capitalone.com/bank/360checking-guide/
* https://www.aspiration.com/summit/
I do have a few other ones but they're based on relationship banking. All of the above have no fee and no minimum.
For example, if you attempt to opt out, the teller might say, "but what if you are at the gas pump and can't get gas because you have opted out of overdrafts?" The subtext being, "wouldn't it be better to get enough gas to get home and in the process incur a 40 dollar fee."
A good bank let's you disable overdraft for debit card while enabling it for checks.
AmEx allow direct deposit to their Bluebird card which is another Walmart card.
They don't pull your credit to open an account, so I don't see how that's true. I've had one since I was 18 (and had no credit history to speak of).
A lot of financial institutions like to offer products to 18 year olds. Ask about credit cards issued to college students.
Edit - from the comments below it sounds like the issue is caused by a fucked up banking system more than anything.
and then find out about your overdraft (and the 17 following it) a week later when you get a letter in the mail.
So, you've listed her two options. One is a bank that is far, far away. The other is Walmart. She's chosen Walmart. So what are the downsides to the Walmart thing? There are no fees for most things you might care to do with it [2]. The money stowed in the vault does not accrue interest [1]. How about the upsides? She may be encouraged to save more. She may learn more about managing her money. And when she learns enough about the fees to realise that the $25 prize only covers 5 months worth of fees, she may reconsider. But in the meantime, she's learned more about managing her money, and that's useful. The alternative is that perhaps the prizes may play to an addictive personality, in which case there are bigger issues anyway.
So, she's made a silly decision. But she's made one none-the-less. Walmart is most definitely making more money out of this than she is. But everyone makes decisions based on what they know and what is available to them. If this is her best option now, at least it may be a driver to find a better one in the future.
[1] https://www.walmartmoneycard.com/account/faqs [2] https://www.walmartmoneycard.com/account/legal-info-page?pro...
The fee is not on low balances. It's on low loading volume.
I'm not trying to say the unbanked don't have barriers. I just didn't like the assertion that free checking is impossible, since that's what leads to even people on HN paying needless maintenance fees.
It's literally their job. It's their function. Why am I reimbursing them? I'm giving them my money essentially to invest, why am I also paying them to support basic business functions on my money, with my money, while they make money using my money?
It's easy to say "hurr durr why are you paying them for a service they provide, who does that??" but that's missing the point. Banks are a special case.
> I can't see it as morally 'disgusting'.
It disproportionately affects the poor, and for no real reason than 'I can charge this so I will'. Apparently some places charge you to even check your balance? What the hell.
> I don't really know who covers that cost in the UK
The big, fat, rich banks do. Because the total cost of running all their ATM's is a fraction of a rounding error on their yearly turnover.
It sets a floor for the spread, not a ceiling. All else being equal, the bank should make more money when the amount of interest it has to pay its customers drops.
But what about those people who aren't giving the bank any meaningful capital to invest? What is the bank getting in return in that case?
Or are you arguing that banks should be forced to provide it as a kind of social service even if they don't earn anything? I can understand that kind of point of view.
Or are you arguing that banks should be forced to provide it as a kind of social service even if they don't earn anything?
The people not giving the bank any meaningful capital are going to cost them much/anything,because it's not as if Joe Bloggs with $500 in his account is going to be doing a thousand withdrawals and balance checks a month.
The point is the banking fees hit those who can least afford to pay them the most. It doesn't have to be like that, and I can understand a kind of point of view that supports it.
It's also clear that banks aren't losing money. What's at issue is how they earn their money and at whose expense.
And it's not like they are about to go out of business either.
Have we forgotten what a bank is for? It's to conveniently and safely store money. Part of that convenience is to withdraw and store money at many locations. If a bank didn't offer that they wouldn't get my money.
Even now, most free checking accounts only require a certain amount of money, transactions they collect fees on, etc.
With interest rates so low, they don't make much just holding onto 500 dollars for someone.
Savings accounts had less fees, but you couldn't use them to write checks out of, etc.
What capital? The people referred to in this article don't have any savings. Many working class people have no savings at all, and only a few thousand in their current accounts.
I suppse where bank accounts are free including services like ATM that might be an indication that banks compete for all customers - which might ni turn be an indication that all customers are reasonably likely to buy financial products such as taking loans or savings products in the future.
Criticising this offer is as valid as criticising any other expensive and bad service.
1) CSR interactions cost them way more than they'll ever make from the account, if the person stays poor forever
2) A lot of banking actions are not proper "transactions" or atomic in the CS sense -- you can end up overdrawing an account pretty easily. A genuinely poor person is eventually going to get charged off on this.
A lot of poor people fail chexsystems (bank account credit check, basically) from bounced checks, and thus can't open accounts. Which then limits their access to the banking system, including receiving funds, forcing them to use more expensive alternatives.
You are right to say that a few of the specifics I gave were not correct. I was clearly not arguing that. However, the specifics you gave were not 100% correct either. For instance, if you go to an atm machine in a wal-mart and attempt to withdraw cash, you will be charged 3 dollars. The fee breakdown I linked bears this out. A fee breakdown, I might add, that is several pages removed from the main page describing the class of card in question.
> You can withdraw cash from your card at any Walmart register or MoneyCenter. This service is free for the Walmart MoneyCard product with Cash-Back Rewards.
Where are you looking?
now click on the fees tab https://www.walmartmoneycard.com/account/faqs#fees
then click on the 'fee plan' link https://www.walmartmoneycard.com/account/legal-info#feeplan
then click on the 'view the Wal-mart money card fee plan' link https://www.walmartmoneycard.com/account/legal-info#feeplan
and you will arrive at the fee plan I linked earlier.
Yes, they do charge fees at the register, regardless your link. When I went and deposited the $200 check from Wal-mart at a register, and $197 goes in... yeah. You can link URL's all you want. But 3$ disappeared in that transaction for "reasons".
I know because I've used the plans that people here are talking about. Unlike the rest of you, I've had them. I've used and been used by them.
Yeah. I have. I did the Green Dot. Pile of shit, with hidden service fees, usage fees, loading fees, fee fees. Oh yeah, YC.
Ive been on food stamps. I've been on unemployment. Even been homeless for a time. Right now, I have a significantly better job... But I still live in a trailer.... err, "Tiny House".
But anyways, good luck explaining what you mean. These people don't get it, and their societal structure means that they won't get it, even if you linked the very documents to them. It's out of their worldview.
Also, to quote from the article.
"Check-cashing outfits, payday lenders, and similar businesses are often thought of as merely preying on poor people, who, the conventional wisdom goes, tend to make bad financial decisions. Lisa Servon, a University of Pennsylvania professor of city and regional planning, offers a different angle in her recent book, The Unbanking of America: How the New Middle Class Survives. During Servon’s research working as a teller at a check casher and payday lender, consumers told her that the fee structures of nonbank alternatives were more transparent and predictable than those at conventional banks—crucial to anyone living on a budget."
I understand where you're coming from, I was in the payday loan trap at one point.. robbing peter to pay paul as it were, I made much less than 40k a year, its only in the last 5 years I've started to get north of 50k, and gotten comfortable.. now I save save save..
I guess the main thing I was attempting to communicate is that the facts on the ground are very different from the facts as presented in this article and elsewhere online. While it's definitely difficult to convey this in brief internet comments, I do feel there's a worthwhile discussion going on, so thanks to all involved as well as those reading. :)
You may be able to find a couple credit unions that do this, but you still have minimum account balances and other hurdles that make it difficult to open an account if you have bad credit and little money (not to mention time or financial savvy).
I don't know about the credit check part; I set up with my parents years ago so that may have exempted me as I didn't have any credit history at the time.
...in the US.
In the UK its the opposite; the majority of checking accounts are free, some premium accounts charge a fee but generally come with rewards.
Overdrafts; there are fees for unarranged overdrafts, but its reasonably trivial to arrange a limit and this is generally fee-less (naturally you pay interest; mine is 1.2% calculated daily)
ATMs are largely free regardless of who your bank is.
Every credit union in my area offers free draft accounts as well, just put the $25-100 member balance into savings and you're done.
They have proven to be a criminally fraudulent organization time and time again.
https://www.capitalone.com/checking-accounts/online-checking...
> Walmart Card Cashing / Withdraw cash without a fee at Walmart MoneyCenters and Customer Service desks. / No Fee
there's no fee for withdrawing cash in any Wal-Mart.
That seems to be the same as any other normal bank -- except for some credit unions that reimburse you, you don't get free withdrawals at random ATMs (I have BoA, and it's the same for me).
Indeed. And I'm still paying for it after many years. I got fucked over with payment reordering for bank-profit maximization, even with "overdraft" disabled. Didn't matter. Because whatever the bank says, is the ordained truth. And when your name gets on ChexSystems and other lists, you're done for.
My wife was did in similarly. The local credit union said she owed $120 for previous account issues that pertained to her then ex-husband. Didn't matter. The bank said it was hers, and too bad. There is no recourse. The bank/CU is god, no if's ands or buts. And suffice it to say, if you're in this position, there's no money for a libel suit (which is what it is, without a court determination).
> "Check-cashing outfits, payday lenders, and similar businesses are often thought of as merely preying on poor people, who, the conventional wisdom goes, tend to make bad financial decisions. Lisa Servon, a University of Pennsylvania professor of city and regional planning, offers a different angle in her recent book, The Unbanking of America: How the New Middle Class Survives. During Servon’s research working as a teller at a check casher and payday lender, consumers told her that the fee structures of nonbank alternatives were more transparent and predictable than those at conventional banks—crucial to anyone living on a budget."
I would agree with the transparency discussion. But it's also much more predatory. They get their pound of flesh. And this flesh is taken every time you use it. Banks do cover up and obfuscate their fee structure, but if you have the usual minimum balance, you'll never see this. Banks also rely on lack of CSR's for rich people. Because money's nothing, not a big deal. Bills are minuscule compared to income.
> I understand where you're coming from, I was in the payday loan trap at one point.. robbing peter to pay paul as it were, I made much less than 40k a year, its only in the last 5 years I've started to get north of 50k, and gotten comfortable.. now I save save save..
Yeah, it's not common to see people here who know what this all means. Fortunately, I was able to avoid the payday trap.. But not student loan trap, credit card trap, medical trap.. Right now, I have a garnishment for an injury sustained in 2008. Had insurance, but the physical therapy "wasn't approved". For a while, I was job hopping a bit and stayed ahead of the garnishments. And unemployment is ungarnishable in Indiana.
Credit cards.. Well. I had them when I had a job. Paying them down is hard without one. But it's easy money to get food and basics when you're waiting for unemployment. Fortunately, a few of them have been written off.. but that just burns another bank. At least Google Voice allows me to shitcan creditors, especially when I dont have the capability to pay.
School debt is a whole 'nther area. I got into my accident which caused my medical debt, but also caused all those classes to fail. But the school gets their cut, regardless if you do well or not. The school can do horrendously, apathetically, and cutthroat.. and they're guaranteed their money no matter what.
I did schooling at a "proper 4 year university" with frankly nothing to show for it. And I believe this burden should also be shared in part with the organization that also failed me in my educational goals. But, even this "Public University" is run much more as a Business than a public trust or institution. But likely, I'll be paying this off with garnishments in my Social Security.
In reality, this whole area is a sore point. Many people here, given the focus of HN, will never have to suffer like this. They'll also never know the pain of hurting, and not being able to fix (no medical care). They'll not know what it means to go hungry because you're waiting for the unemployment to start along with food stamps. They won't know the shame of walking into the food pantry, or using the foodstamp card. Nor will they see the looks you get, when you borrow your mother's vehicle to get the groceries... How dare you not be dressed in tatters and driving a rust-eaten beater truck.
It comes down to understanding "Us" vs "Them". I was an "Us", and remember that well. I'm on my way to being a "Them". Faking it, living the culture, understanding the nuance. But I understand, and seeing many posters here in this thread brings back all that anger of being taken advantage of, and having no power to do anything about it.
For as awful as they are, Wells Fargo even has the "opportunity" checking account that gives people who have negative marks on ChexSystems a second chance at having a proper checking account. Compared to the awful re-loadable debit cards from Walmart, et. al, it's a great option and the monthly fee can be waived with 10 debit transactions per month or $500 in direct deposits.
Would I go out of my way to say I LIKE Wells Fargo? Hell no, they've done tons of shady stuff - but compared to how US Bank has screwed over every one in my family at least once they've been at a "below average" level of suck.
Not always, my debit cards have always had the overdraft facility turned off. If there's no money in the account then the transaction doesn't go through.
Is their anywhere else in the western world that has these problems? Or even the developing world?
For another laugh buy a house or car with a loan and there's zillions of little fees and commissions tacked on to the base price. Complexity only increases over time, and it only decreases with collapse.
This is part of the logic of the old great depression "liquidate liquidate liquidate" guy who sounds heartless in retrospect but in practice the only way to reallocate poorly allocated resources in the modern capitalist system is to flush and start over, so not knowing the GD was going to be as bad as it turned out, the guy was correct, the faster the obsolete stuff gets flushed, the faster we get back to real living. Which is analogous to current conditions, and why many people are unhappy nothing has been fixed in the banking system (or another example is health care, obamacare and trumpcare have in common that they fix none of the core problems, which is our health care allocation system is an expensive disaster)
No shit the act of depositing and withdrawing are different. But they still get their $3 cut for each of these. How about you go spend 3 packets of $200 on this and report back your results instead?
The gas station issue has been mostly solved, debit networks now allow you to query the available balance on the linked account - I've been embarrassed once a few years ago when the pump only allowed me to put a couple dollars worth of gas in the tank because I had overdraft protection turned off (not an issue these days, I'm in much better financial health).
The issue with restaurants will eventually be solved when they are forced to switch to EMV and require you to put the tip in before the card is run, not writing it on the receipt. But who knows when they'll be forced to, the liability shift obviously hasn't bothered them much.