Walmart's effort to get customers to build up their savings accounts(theatlantic.com)
theatlantic.com
Walmart's effort to get customers to build up their savings accounts
https://www.theatlantic.com/magazine/archive/2017/05/how-to-trick-people-into-saving-money/521421/?single_page=true
221 comments
Just read the article. It's $1 for the card and free cash withdrawal at a Wal-Mart banking center.
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.
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.
>It is $5/mo for accounts with less than $1000, but you're not going to get better than that at a bank.
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.
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.
Not all credit unions are equal, so just watch out. I had been actively using my efcu account then switched to usaa bank for the bulk of activity, and - my mistake - wasn't watching the efcu cu account closely enough and they started charging $5/month inactivity fees.
Skip the bank. Credit Unions are where its at: nation-wide shared branches, fee-free checking, sane overdraft policies, no minimum balances, reasonable interest payments, and in my experience, not a single instance of them blatantly trying to screw customers.
I just checked and my CU has a $30 overdraft fee, which can be disabled if you're willing to let things bounce.
I just checked and my CU has a $30 overdraft fee, which can be disabled if you're willing to let things bounce.
CU member, and I'll mention one downside. Unless your credit union has a local branch, you will need to get used to all kinds of weird restrictions on what your satellite branch can do for 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).
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).
Why don't you just close your account your CU and open up an account at the one closest to you? I have no loyalty to my bank. If I move and there's no branches around me, I'll just move to someone else that is local.
Try opening a CU account without credit.
I didn't have credit when I opened my account with a CU. I don't even think they ran a credit check.
I had little (and mostly bad) credit when I opened my first CU account. Wasn't a problem, at all.
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.
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.
Most small and medium size banks don't pull your credit report. Its Chex Systems to see if you have any deposit accounts in bad standing. Some also pull fraud scores from experian or equifax as well to see if you information has been used in identity theft recently.
No credit, or bad credit?
I can confirm at least for my union, they had no issue with my very bad credit. They were more concerned with recent debts and rent, things like that.
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.
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.
> It is $5/mo for accounts with less than $1000, but you're not going to get better than that at a bank.
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.
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.
Your comment would have been better if you had linked to examples rather than accusing the parent of spreading FUD.
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.
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.
Here are my various no-fee checking accounts:
* 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.
* 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.
Step 2 in this analysis: Would you be able to get any of those accounts with a low credit score? I'm pretty sure when I opened my Schwab checking account they ran a credit check.
I've had most of those accounts since I had virtually no credit (and a low/nonexistent credit score). That being said, if you have a negative Chexsystems report they'll be hard to get.
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.
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.
Schwab runs a credit check for that account because they also open a brokerage account for you that allows you some ability to float funds.
Bank of America customer here. Not aware of any fee being applied to my checking account.
It's important to note that many large banks actively discourage customers from opting out of overdrafts. So much so that they even have scripts they make their tellers recite.
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."
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."
Allowing overdraft for checks can save you money though since you'd have to pay the depositors fee otherwise.
A good bank let's you disable overdraft for debit card while enabling it for checks.
A good bank let's you disable overdraft for debit card while enabling it for checks.
Solution: don't write checks? I use cashier's checks wherever possible, I get them for free and there's never a potential for overdraft nightmares since it comes out of my account right away - the only time I've written a check in recent memory is the registration fee for my daughter's preschool since my wife wanted to pay it on-the-spot if she liked the place.
I am willing to wager that those accounts have requirements for automated deposits into them and or are tied to other accounts that have similar balance/deposit requirements.
What do you mean by "It is $5/mo for accounts with less than $1000, but you're not going to get better than that at a bank."? Aren't there lots of banks that charge nothing even if you only have <$1000?
A great example is Ally Bank (happy customer here!)
https://www.ally.com/bank/interest-checking-account/#fees
https://www.ally.com/bank/interest-checking-account/#fees
Seconded! Been a customer for 10 years and I'm still extremely happy. I can't say that about any other business I've ever worked with.
There aren't many anymore. Banks mostly eliminated or heavily restricted free checking accounts when overdraft fees got capped.
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).
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).
My credit union requires I have a savings account with $5.00. The overdraft fee is $30. There are no recurring costs outside of that. Both checking and savings accounts earn interest - much less for the checking account - rather than costing me money.
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.
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.
> There aren't many any more...
...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.
...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.
In France they sure aren't free. Banks even charge a monthly fee for a debit card in addition to a monthly account maintenance fee. Of course banking in the France is stuck in the 1980s with many banking transactions requiring an actual visit to your specific bank branch and a consultation with your personal banker.
Interesting; my perspective (working in the finance industry) has been that European banks are ahead of the curve with technology and, importantly, technology for customers. It sounds like maybe not?
Not really. It's very expensive to be poor (in the U.S. at least).
It grates for me when I withdraw cash. The most convenient ATM for me charges $3 when I withdraw money. My approach to this is to never pull less than $300, so the fee is 1% or less. But for people who are pulling $20 because that's what they have right now, this is a 15% tax. It's a perfect example of regressive taxation. For me it's a minor inconvenience, for most Americans it's a significant burden.
Get an Ally account. Problem solved. I believe you get reimbursed for up to 10 withdrawals a month or so.
Don't use out-of-network ATMs. Especially privately owned ATMs as they are far more vulnerable to skimming.
If you use your debit card to pay for groceries, you can get $40-60 cash (or more) each time without paying a fee.
My debit card comes through a credit union. As long as I use the ATM of another credit union in the same network, I pay no fee. As it happens, there is such an ATM on the side of the building where I work, and for that matter I think there was one about half a mile from my late mother-in-law's house a hundred miles from here. I do resent paying $3 to Bank of America because I forgot to withdraw money before I left for work.
Often times banking services like this make money off of incidental fees like balance inquiries that would normally be free, or fees to call an agent.
A lot of banks got rid of their free or low cost checking accounts. Hard to find anything less than $12 per month when the balance is below $1500.
I wouldn't say it's hard, Wells Fargo has free checking for anyone with over $500/mo in direct deposits or makes 10+ debit card transactions per month. Even someone making part-time minimum wage can probably make the debit card requirements without an issue.
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.
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.
You can't be seriously recommending Wells Fargo to any consumer are you?
They have proven to be a criminally fraudulent organization time and time again.
They have proven to be a criminally fraudulent organization time and time again.
Some people can't afford to be overly picky with their bank, and I know at least one person who has been screwed by at least one of the big (US, consumer) banks (Bank of America, Chase, Citi, US Bank, Wells Fargo) - all of them suck.
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.
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.
If you never have to make cash deposits:
https://www.capitalone.com/checking-accounts/online-checking...
https://www.capitalone.com/checking-accounts/online-checking...
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Technically true, many banks charge a monthly fee, but most/all credit unions do not.
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).
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).
They could probably win on goodwill if they waived that fee freely for anyone who walks into a Walmart every month, or makes a single transaction, or is part of some group considered vulnerable or worth subsidizing (veterans, benefits recipients, etc.)
I literally have 3 accounts that are better than that, also with no ATM fees.
> It is $5/mo for accounts with less than $1000, but you're not going to get better than that at a bank.
A simple google search for free checking account gave me 20+ such banks in the first result.
A simple google search for free checking account gave me 20+ such banks in the first result.
>It is $5/mo for accounts with less than $1000, but you're not going to get better than that at a bank.
What? It costs money to lend your money to the bank in the US?
What? It costs money to lend your money to the bank in the US?
At lots of places, yes. They usually wave the fees for modest account minimums or accounts that regularly deposit paychecks.
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.
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.
I read it. Maybe you should go to a store and actually get one of these cards, then let me know how it works out.
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.
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.
Um, no, you completely made up the numbers, making no attempt to source from the article which laid them out clearly. It's not the same "ballpark".
- 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.
- 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.
https://www.walmartmoneycard.com/account/legal-info-page?pro...
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.
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.
Dude, you really need to think carefully about whether you are approaching this topic honestly, or if you are hunting for reasons to reinforce your belief that this card is a scam.
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.
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.
Not sure why you are accusing me of intellectual dishonesty, unless the goal is to derail the conversation.
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 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.
The FAQs (https://www.walmartmoneycard.com/account/faqs) say
> 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?
> 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?
Alright, start on the page you just linked https://www.walmartmoneycard.com/account/faqs
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.
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.
That number isn't for ATMs in Wal-Marts, it's the general "at an ATM" fee. If you look below,
> 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).
> 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).
I suppose you're in the wrong income bracket to have considered services from them.
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.
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.
Withdrawing cash != cashing a check. Stop accusing people of not being familiar with these products just because they aren't conflating different services the way you are.
Ah, another silver-spoon apologist who has never seen or used these plans.
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?
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?
Why can't you just tell us about the time you withdrew cash from this card at Walmart and got charged a fee? Is it because that doesn't happen?
You do realize you're talking to people who've never had to use these services, never made under $40K (except when living at home), and are many steps removed from ever having to go through this?
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.
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.
I think another point to be made is the OP is correct - most non-bank alternatives are horrible, but so much of modern society is inaccessible if you do not have a bank account or bank account analog.
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..
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 think another point to be made is the OP is correct - most non-bank alternatives are horrible, but so much of modern society is inaccessible if you do not have a bank account or bank account analog.
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.
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.
Hey thanks for the support. While I don't think making sweeping generalizations about HN readers is necessarily constructive, I would definitely agree some of us are working from very different assumptions here.
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. :)
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. :)
As someone from the UK I always find it astounding that Americans are used to paying money to.. withdraw or deposit their money. How did this become the norm? I find it a bit disgusting actually.
The only cash machines that charge over here that I've seen are rented ones at packed events (clubs, concerts etc).
The only cash machines that charge over here that I've seen are rented ones at packed events (clubs, concerts etc).
It's not the norm. Most Americans (at least in my experience) will go out of their way to use an ATM that doesn't charge them. Accordingly, picking a bank with a large ATM network is a major consideration when choosing a bank. Some smaller banks compete with this by reimbursing fees charged by out-of-network ATMs, making all ATMs effectively free.
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.
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.
I believe the CFPB has at least put the fear of god into most banks, at the very least Wells Fargo changed from largest-first to time-of-transaction ordering for debits from the account in the past couple years - and I believe most of the other big banks have done so as well.
Of course, the CFPB is looking pretty dead at this point, so who knows what they'll do after Trump dismantles it.
Of course, the CFPB is looking pretty dead at this point, so who knows what they'll do after Trump dismantles it.
I've got a Charles Schwab account mainly because it refunds all my ATM fees at the end of the month. It's great never having to run around looking for the right brand of ATM.
I was amused about cash machines at major English banks blurting out:
FREE CASH
Of course that unfortunately only means that you're not charged for the withdrawel, but the cash doesn't really come free.
FREE CASH
Of course that unfortunately only means that you're not charged for the withdrawel, but the cash doesn't really come free.
I don't think it is the norm. Only time I've paid fees is at the ATM.
ATM fees are unusual in the UK, as the parent post said, though we use the term "cash machine".
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.
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.
The fee isn't a huge deal the times I've needed an ATM and my bank didn't have any of theirs nearby. It's a couple bucks which isn't too bad.
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.
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.
In Britain, I think the banks charge each other. According to [1], 98% of withdrawls in the UK are free.
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.
[1] http://www.link.co.uk/
[2] http://www.link.co.uk/about-link/statistics/
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.
[1] http://www.link.co.uk/
[2] http://www.link.co.uk/about-link/statistics/
People usually pay fees for using ATMs outside their banks network (some banks join broader networks in order to offer more ATM locations to their customers.)
A few banks (USAA, Schwaab, others) offer ATM fee reimbursal, but most US ATMs will charge you unless you're part of that bank's network. It's really not the best, especially when you're at cash only places, which seem to be popping up a lot near me.
In the UK, the vast majority of ATMs are free.
One reason I think is that a lot of the time you're not withdrawing money from your bank's ATM or one associated with any bank at all, partially because of sheer land mass, so the operator has to have some way of recooping the expenses of operating those machines. A lot of banks provide free withdraws from their own ATMs and some even just the fees for their customers like my bank.
> I find it a bit disgusting actually
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.
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.
> But withdrawing and depositing money is a service that costs the banks money to do doesn't it?
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'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.
Historically, retail banks made their money off of the spread between their loan interest rate and the rate they pay out on deposits. So they borrow from your deposits at 2% and loan it out at 5%, pocketing the 3% difference. Over the past 20 or 30 years, extremely low interest rates and competition with money market funds and other more complex savings vehicles have reduced depository interest to essentially nothing, which sets a ceiling for the spread. So for a bank to make money off a regular joe who doesn't have enough money to access investment banking services, they need to charge fees to make a profit. For example, if you have an average $1000 in your account, the bank may only make $10 off of that in a year. Many lower end clients, the ones who tend to pay high fees for overdrafts, have even less money than that deposited on average. Also it's worth pointing out that most banks charge withdrawal fees only if you use another bank's ATM. It's entirely possible to have a checking or savings account at a bank and never pay significant fees if you don't overdraft or drop below minimum amounts. Of course, those issues tend to affect poorer customers disproportionately, but it's not without reason even if it is problematic socially.
> So they borrow from your deposits at 2% and loan it out at 5%, pocketing the 3% difference. Over the past 20 or 30 years, extremely low interest rates and competition with money market funds and other more complex savings vehicles have reduced depository interest to essentially nothing, which sets a ceiling for the spread.
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.
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.
> I'm giving them my money essentially to invest
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.
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 answer to "not enough people are giving banks capital to invest" is not "charge people more", it's to work out why nobody is putting their money in banks. Could the charges be a factor? Or a paycheck-to-paycheck economy?
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.
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.
In many countries, this limited bank runs out of the post office. TBH, that isn't a terrible idea for the US. It would shore up the USPS, which primarily makes money by delivering junk mail, and it provides lower cost banking for those who would wind up paying check cashing fees.
At the scale larger banks are operating at, you could argue that even customers storing a few dollars each represent a significant block of capital in aggregate.
It's also clear that banks aren't losing money. What's at issue is how they earn their money and at whose expense.
It's also clear that banks aren't losing money. What's at issue is how they earn their money and at whose expense.
So, where I live there's at least 5 different banks that offer free accounts, domestic transfers are free, and I think about three of them offer free withdrawals from any ATM in the country. Withdrawing from a foreign ATM in Europe is like 0.3 EUR. Oh and they give you a card for free, of course.
And it's not like they are about to go out of business either.
And it's not like they are about to go out of business either.
When banking becomes optional, I agree, however I need a bank and I ain't paying to take money out of it. When banking is optional, by all means they may charge, but I will take my cash in £20 pound notes in Royal Mail Special Delivery at the end of the month cheers!
I can't understand this point of view. Food isn't optional, and you still have to pay for that. Why should banking be free?
billing systems always expand to be as maximally complicated as the system will survive. Consider telephone billing toward the end of the last century, until the cost of billing exceeded the revenue from exotic billing systems, there were all kinds of insane schemes about internal, intra-LATA, inter-LATA, in-State, nationwide-LD, international, it was a complete circus. Eventually the cost of administrating that exceeded every other cost of providing service and now we just get "minutes" or even unlimited (provided with a weirdly billed data plan of course)
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)
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)
You don't order food from a restaurant and have the restaurant take/withhold a portion of your meal off you to cover the cost for bringing it from the kitchen to your table.
But they do charge you more than what it costs to make the food. I know what a USDA Choice ribeye costs and it sure isn't what the steakhouse down the street charges me. You could also say that your restaurant bill is covering all the food they have to throw away at the end of the night. Not to mention tip, there's another 20% add on.
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Those are the costs associated with running a bank. It's paid for by giving them access to our capital, that they can use to invest.
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.
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.
"Free checking" is a relatively new practice in banking that really only caught fire after ATMs were invented. Banks would charge fees on transactions--like most financial services do.
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.
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.
> It's paid for by giving them access to our capital, that they can use to invest.
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.
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.
A person being a customer of a bank means the bank has first access to that persons business when they need mortgages, other loans, home insurance, buying funds for retirement savings etc.
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.
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.
Which does not make this offer reasonable, it is still ripoff. They are better off keeping money in box at home.
Criticising this offer is as valid as criticising any other expensive and bad service.
Criticising this offer is as valid as criticising any other expensive and bad service.
Do believe that banks are setting their fees based on their associated costs?
I can't give a super accurate history of how we got here, but it seems as though it's been a gradual process. Once the banks saw that people at bars, casinos, and high end hotels would pay these 'convenience' fees, they said to themselves, "why not do this everywhere?"
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. :)
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. :)
The article sort of addresses the consumer motivation for choosing prepaid cards over traditional banks:
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.Bluebird, a Walmart/Amex prepaid product has $0 fees for nearly everything (including even free foreign currency transactions). And offers free checking for the 'unbanked'. https://www.bluebird.com/#fee-chart
Is there data on the number of CU's that don't charge fees because I haven't found one that doesn't charge overdraft and have seen a monthly low aggregate balance fee?
My credit union has a $5 minimum savings balance. That is it. No monthly fees, but it does have an overdraft fee. It is going to be exceedingly hard to find any bank that doesn't have overdraft fees - that is where a lot of their revenue comes from.
I couldn't say, but would be interested to find out. As far as CU's are concerned, I'll admit that I'm speaking anecdotally.
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.
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.
And yet, thousands of people who started using the cards have increased their savings more than they would have otherwise. Yes a credit union is preferable, but the point is that this demographic of people wasn't using them (or regular banks) and that these cards have encouraged better behavior through a new psychological angle. If the net result is positive, I wouldn't get hung up on the fees.
If at all possible, people in this sort of situation would be much better served by joining a credit union.
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?
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?
Some may not realize this, but there is a YC backstory here.
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.
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.
>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.
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.
"living paycheck to paycheck is now a commonplace middle-class experience"
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.
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.
> 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"
I have a very hard time believing that anybody believes this
I have a very hard time believing that anybody believes this
Talk to some engineers from a state country or culture that Engineer a title not a verb. They'll completely flip out at someone calling themselves an engineer without the royal title having been granted, merely because they're doing engineering (as a verb). Also some HR personnel outside tech are incredibly and stereotypically classist with respect to degrees being necessary for hiring. There's the attitude from K12 education system and most who believe themselves middle class about any career path not involving a college degree "Our kind don't become carpenters, can't you get a degree in wood-art or business and then build things?"
tricking people to save paltry sums of money meanwhile using the gains in interest to fund your company's most recent marketing campaign to trick people into buying more useless garbage they don't really need.
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.
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.
I really hate arguments that derive from what a person "needs". Humans need amazingly little. Even when I was living below the poverty line I was bathed in the riches of my civilization, had high-speed internet, ate plentiful food, was clothed and had sheltered.
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.
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.
Your model of human needs isn't adequate for life in anything resembling a functional society, let alone a developed society.
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.
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.
Humans don't need a developed society. That was never a qualification for "need". We got along just fine for hundreds of thousands of years without any sort of civilization at all thank you.
Also, it is pretty arrogant to think you know what somebody else needs are. Furthermore, it can become an attack on the other party's freedom of choice (self-actualization).
A refrain I've often heard from victims of circumstance.
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.
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.
Even that 'wretched' existence doesn't have to be wretched - depending upon the external environment. I've been camping for extended periods with little more than that. Its not comfortable, but the experience was way better in many ways that my 'comfortable' cubicle.
Thank you. I too hate that word. Needs are always backed by wants. A man who wants to commit suicide doesn't need to breathe. A man who wants to sing at the opera needs to practice. Needs derive from wants.
A paltry sum of money is the first step to a reasonable sum of money. An interest in saving a paltry sum of money is arguably a useful skill for people earning paltry sums of money, as I'd hazard a guess that it should encourage them to spend less on useless garbage they don't really need. Gamifying this to the benefit of both parties is capitalism at work. Any comparison to slavery is beyond ridiculous.
> Loretta Taylor, who lives in the southern-Illinois town of Mount Vernon, started using a Walmart MoneyCard when her local bank branch closed late last year, forcing her to drive 45 minutes to make a deposit. A registered nurse, she has lately been working as an in-home caregiver, and sometimes gets paid in cash, which she can put onto the card (for a $3 fee) at a nearby Walmart. “I’m not making much money right now,” she told me recently. But in early January she decided to put $23 in the card’s Vault—and won a $25 prize. Taylor has kept her traditional bank account, and she sounds slightly skeptical of Walmart’s motives. Still, she has continued to use the Vault; she had saved $75 when we talked in early February, including the $25 prize.
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):
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.The way I read it, it takes 45 minutes to drive to her old bank branch, whereas the nearby Walmart is much closer.
Another reasoning for joining a credit union — being able to deposit and withdraw from any nearby credit union whether it's your own or not for no fee.
Assuming there is a credit union nearby. The point of that snippet seemed to be that Wal Mart was much more convenient than a bank.
Well not much more convenient than one particular branch of one particular bank, yeah, but I don't think that cashing a check for free is something that other banks do for non-members (compared to credit unions).
[deleted]
You are misreading the quote. Had she stayed with the same bank, she would have had to drive 45 minutes to get to a branch. There is a Walmart in Mount Vernon, so getting there is more like a 10-minute drive.
I'm not 100% clear on your point. Where does this dependence on megacorp come in? Granted I haven't read the terms and conditions for one of these cards, but I would be surprised if anybody's savings should be held at ransom if they decide to leave. A preliminary search certainly doesn't suggest that you can only spend vault money at Walmart [1].
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...
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...
> $5 a month fee on low balances
The fee is not on low balances. It's on low loading volume.
The fee is not on low balances. It's on low loading volume.
Indeed you are right! Unfortunately, that's even worse.
If you regularly spend $1000+ / month at Walmart, it's better. Otherwise, yes, it's worse.
I suppose you'd rather overthrow the consumerist system, but isn't that making the perfect the enemy of the good?
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.
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.
The reason I have trouble saving is not because I am a weak-willed low-life as implied by this article. The reason is because there is not enough money to pay for things that I need, so I have to make difficult choices about what to go without. And choosing to save usually seems unwise when it means neglecting some other need.
Yes, exactly (and I don't believe the article implied what you said.)
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.
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.
How do we define a rational choice that doesn't end up making the choice chosen always the rational one regardless of what the choice is?
> And choosing to save usually seems unwise when it means neglecting some other need.
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.
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.
I'm just gonna bet that the amount of money Walmart makes in interest on those "vaults" is a lot more than the few thousand bucks they dole out monthly to random users...
So? The people targeted for this card are those who otherwise aren't saving anything. The same people would be subject to larger fees at a bank and get sub-1% rates on a savings account. They benefit from this program. Why should Walmart not see that hole in the market and exploit it? Isn't that what this community is all about?
Yeah, I doubt it's much of a money maker for WM, even at WM's scale, as the transactions are so tiny. The bigger win is presumably that their customers might have some money to spend later on.
It's really just layaway without tying up a product. The customer benefits because the cash is safe. Walmart benefits from the goodwill and high probability of the money being spent with them.
Capital One 360 pays 0.20/0.75 APY (checking/savings respectively) with no fees or minimums (I'm sure others do too, I just happen to be a customer ^).
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.
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're benefiting because before they were not saving in the first place.
The article mentions that many people are unbanked because they fear overdraft fees, or have had to pay them before. This is a well known problem, and it drives people to use check cashing stores and debit cards like the one WalMart offers instead of banks.
They can't get debit cards from a bank? Even my mastercard is tied to a debit account.
Edit - from the comments below it sounds like the issue is caused by a fucked up banking system more than anything.
Edit - from the comments below it sounds like the issue is caused by a fucked up banking system more than anything.
They cannot get a bank account to get a debit card. Banks and a lot of credit unions have become problematic for low income folks.
Why is it hard to get a bank account? There is no risk to the bank from a low income person having an account, worst case for them is it's empty.
There is risk to the bank for bad-credit people having an account.
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.
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 can overdraft debit cards, and of the college students i've known over the years, that's the most common thing to overdraft.
and then find out about your overdraft (and the 17 following it) a week later when you get a letter in the mail.
and then find out about your overdraft (and the 17 following it) a week later when you get a letter in the mail.
> you can overdraft debit cards
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.
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.
It's possible to overdraft a debit card even if overdraft is not enabled on the account, due to how some merchants process some transactions.
That's a cost that should be worn by the merchant, if they aren't going to check that money is available in the account then that's their problem.
Is their anywhere else in the western world that has these problems? Or even the developing world?
Is their anywhere else in the western world that has these problems? Or even the developing world?
The biggest places you used to see this were gas stations, they'd put a $10 hold on your account and then post the transaction for whatever you actually purchased - this two-phase process also exists at restaurants for tips.
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.
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.
Unsure why this is so downvoted? Several banks support turning off the overdraft feature, which just causes debit transactions to be declined (or ACH items returned).
What about NSF fees? The NSF fee at my bank is 8x more than the overdraft fee ($40 vs $5 + 20% APR). Turning overdraft off would be a poor choice for me even if I anticipated the occasional overdraft.
The problem is that those features don't always work if multiple pending transactions have been submitted, or if checks are used, transactions ordered a certain way (some banks have been in trouble for doing this in the past), etc.
Capital One 360 is for people with better credit than the folks in the article have. If you have means then you get better investments. Heck, a lot of the people in the article are rejected just trying to open a bank account.
AmEx allow direct deposit to their Bluebird card which is another Walmart card.
AmEx allow direct deposit to their Bluebird card which is another Walmart card.
> Capital One 360 is for people with better credit than the folks in the article have.
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).
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).
No credit is different than bad credit. They do claim they stopped using Chexsystems as an additional check but they still check credit.
A lot of financial institutions like to offer products to 18 year olds. Ask about credit cards issued to college students.
A lot of financial institutions like to offer products to 18 year olds. Ask about credit cards issued to college students.
That's how a win-win works. If Wal-Mart can make a profit by getting people to save money there's nothing wrong with that. Especially when compared to the banks that make significant money fining you for being broke.
Except that by giving walmart money that could be invested conservatively, you've actually losing money to inflation. True, this is exactly what most people do with their banks, but banks aren't win-win either, they're both businesses that offer these services because it makes them money.
The people who use the WalMart debit cards are not the kind of people who invest money, or even normally save it. They are poor people who often have zero cash savings, and now they have some.
> Except that by giving walmart money that could be invested conservatively
This isn't money that could be invested conservatively - this is money that might be needed tomorrow, or next week, or next month.
This isn't money that could be invested conservatively - this is money that might be needed tomorrow, or next week, or next month.
How do you expect the factory worker to start investing her <$500 savings?
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%.
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%.
this is probably the most valuable comment here.
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.
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.
Your first $1000 should be considered an emergency fund much more than an investment. Everyone should have or work towards having $1000 to their name, but way too many are living paycheck to paycheck and saving literally nothing.
Slighlty offtopic - but why are not debit cards popular in US. A card in which you put money and withdraw/pay untill they ran out. No overdraft/credit/direct debit bullshit to be concerned with.
They are perfect solutions for the poor and underbanked... whatever that means. Small fees, small charges, impossible to rack gazzilion dollars in penalty fees.
They are perfect solutions for the poor and underbanked... whatever that means. Small fees, small charges, impossible to rack gazzilion dollars in penalty fees.
The whole idea of being 'unbanked' or 'underbanked' is so foreign to me (as an Australian). The whole state of banking just seems so antiquated in the US...
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'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.
> Public schools over here have... programs where every student would get a bank account in the first grade with no fees
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 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 think those are actually promotional programs run by the banks (but I agree they're a good thing)
Commonwealth bank was government owned at the time.
Commonwealth bank was government owned at the time.
Yep, my first account was through the Dollarmite program too.
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.
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.
> Commonwealth Bank Dollarmites
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%…
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%…
> I still have the plastic piggy-bank somewhere (and a Fat Cat one, to really date myself).
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.)
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.)
"The whole idea of being 'unbanked' or 'underbanked' is so foreign to me"
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).
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).
Debit cards are popular in the US, but so are overdraft fees (from the bank's perspective, anyway). When I last opened a checking and savings account, I was offered overdraft protection on my debit purchases, and though the default was to have it, I opted out. Why risk the fee? Granted, I'm not necessarily in the same position as every American, or even those in the article, but I would rather be embarrassingly denied my $4 cup of coffee than have it turn in to a $104 cup of coffee.
> No overdraft/credit/direct debit bullshit
> to be concerned with
Sure, this can happen. I think it's a reasonable assertion to say that the UK banking system is, by and large, better than the US one across all income groups.
They are, but only kind of. Most places give you a MasterCard Debit or a Visa Debit. Its just linked directly to your bank account.
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...
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...
I was wondering the same thing. From the comments it seems as though the US banking system seems to be stuck in the 80's. I can't believe they still have checking accounts, in my mid 30's now and I've cashed one check in my life.
Come to France. People use checks all the time. You still have to visit your "personal banker" to accomplish many tasks. If US banking is in the 80s, then French banking is in the 60s.
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.)
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.)
> "checking" account is just a terminology
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.
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.
> you might call a "salary account" in other places
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.
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.
When I opened my account with my credit union they gave me 2 free boxes of checks. In the 5 years since I haven't even used a single book of them so this should be a sufficient supply for a lifetime.
I'm so glad I have never used a check. I'm 40 and haven't even paid a bill without using the internet (so basically for 22 years now).
>Walmart sells the card for $1, and Green Dot charges the usual associated fees: $5 a month if your balance is less than $1,000; $2.50 for ATM withdrawals; etc.
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.
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.
"Steal business from local banks.."
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.
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.
What I'm trying to say is that Walmart isn't actually providing much value over the local bank, as the consumer costs are astronomical in comparison to the average account balance. The whole notion that they're helping the person "save" while charging these fees is ludicrous; and this is what the article is purporting.
You are correct though, local banks aren't necessarily helping people save either, especially those who are living paycheck to paycheck.
You are correct though, local banks aren't necessarily helping people save either, especially those who are living paycheck to paycheck.
Did I just read an ad for Walmart?
I load cards often and will make this surprising statement.
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.
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.
Walmart's idea of winning cash based on savings deposit amounts reminded me of the Freakonomics savings lottery from the 2010 podcast: http://freakonomics.com/podcast/freakonomics-radio-could-a-l...
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> living paycheck to paycheck is now a commonplace middle-class experience
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?
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?
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The middle class in America average about $50k in household income ($25k each).
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.
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.
Price is determined by demand, yes, but also by supply. I'd pay an awful lot of money for food, but cheap industrial farming means I don't have to. Housing is more limited because the monopolistic nature of ownership, but there is a reason why suburbs grow, cheap land.
That's under the assumption that people don't want to save any money.
Its also under the assumption that a socioeconomic class that never amounted to more than 1% of a population historically, after temporarily booming in population, somehow isn't going to go away or back to historical norms. Sure the middle class can't disappear, just 75% of the population in manual labor factory jobs can't just disappear. Something can't happen because it would disturb my carefully crafted worldview. Sure.
The mentioned lottery savings bonds: https://en.wikipedia.org/wiki/Premium_Bonds
"...after a $4 check she wrote to buy coffee for herself and a friend tipped her checking account below the required minimum..."
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.
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.
Square Cash has made a really interesting play at the underbanked market too, with its virtual debit card. But without all of the borderline predatory fees.
having banked with simple.com (now backed by BBVA Compass Bank) I cant imagine how a prepaid Visa card can be better, with all the fees associated.
i really hope HN would fix the duplicate posting issue someday soon.
https://news.ycombinator.com/item?id=14187418
https://news.ycombinator.com/item?id=14187418
I know we're all pretty wealthy here on HN and only a very small fraction of us like myself were ever poor (I was dirt poor in my uni years, where to park the Ferrari while I was in the luxury dorms was not a problem for me, LOL).
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.
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 don't know where you live, but I think in the US your experience is unusual. Rent is the only significant expense I ever have that can't be paid with a credit or debit card. I do use cash sometimes, it's still the easiest way to give money to a friend or to buy something from a yard sale, but it's very rarely necessary.
[deleted]
It's probably less about making them build up their savings, and more about Walmart getting the poor to loan them money interest free, as well as pay them for the privilege through fees if they aren't smart.
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.