
Walmart Prepares to Offer Low-Cost Checking Accounts - spking
http://www.nytimes.com/2014/09/24/business/finding-a-door-into-banking-walmart-to-offer-checking-accounts.html?_r=0
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Someone1234
In the UK "checking accounts" (called Current Accounts) are free. With so
called "Basic Current Accounts" (accounts with no overdraft/borrowing
facility) being available even to people with horrible/no credit at all.

The way UK banks make money on current accounts is via interest (the
difference between the Bank of England rate and their rate, the spread). They
can also charge non-basic current account customers for things like unagreed
overdrafts and so on.

I don't really understand why current accounts in the US cost $12-8/month. It
isn't like "checking accounts" in the US have much better interest rates. So
they're likely double-dipping (getting $ off of the spread AND fees).

Plus a lot of US banks require you to have a savings account with $x in it on
top of your "checking account" just to waive the fee. Which means they're
still double dipping there too, the spread on both the savings in the savings
account (their "savings" accounts have horrible interest rates) and any money
in the "checking account."

This is also making it easy for fraudsters to move money. Since there are no
"basic bank accounts" for the poor, throw-away/burner debit cards have become
common which fraudsters can move stolen money onto and then spend it freely
(as those cards have no ID check, etc).

Don't even get me started on how big of a scam the throw-away/burner debit
cards are. Before you get someone one you should check out the fine print in
terms of fees that mysteriously eat up any remaining balance. Aside from the
risk of bankrupsy and loss of interest, normal gift cards are less of a scam.

~~~
jedc
UK current accounts are free, but I don't think they're accessible to all.
Like the US, I think if you don't have enough credit history (or poor history)
it's difficult to get an account.

~~~
Someone1234
With all due respect did you read my post at all? I literally cover this topic
on the first line, second sentence.

TL;DR: That's what basic current accounts are for.

~~~
jedc
I _did_ read your post. But it was still my understanding that not everyone
can get an account as easily as you describe. If you show up to the UK (as I
did >10yrs ago) from the US with NO credit history, no lease (b/c of company
rental), only US financial info, etc, it's NOT quite so straightforward to
even get those "basic" accounts. I always assumed this was because of the
specifics of the anti-money-laundering laws that are on the books in the UK.

(I've been working with a startup here in the UK that's trying to solve this
and some other similar problems, which is why I even brought it up.) Not
entirely sure why I got downvoted for my original comment, but c'est la vie.

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downandout
This article is making a much bigger deal out of this than it is. Walmart has
entered into a marketing agreement with GoBank prepaid cards. You can already
get one at gobank.com, sans Walmart.

It offers some, but certainly not all, of the benefits of a checking account.
For starters, they don't give their customers checks (so it's not a checking
account). These accounts cannot send or receive wire transfers (though they
can receive direct deposit or any other ACH-based credit, such as those from
PayPal). It also supports ACH debit, and it has a form of of a bill pay
service that uses PayPal to pay any phone number or email address. You can
also have the service print and send a physical check directly to anyone, but
I believe it takes more than a week. Calling it a checking account is a
misnomer at best.

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spking
Some may not realize this, but YC startup Loopt is a big part of this. After
being acquired by Green Dot they built the GoBank product, which is what
Walmart will really be offering here.

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amalag
Most credit unions still give free checking accounts.

[http://www.bankrate.com/finance/checking/want-free-
checking-...](http://www.bankrate.com/finance/checking/want-free-checking-
check-out-credit-unions-1.aspx)

Meanwhile I got something in the mail enticing me with $300 to open a checking
account at Capital One.

~~~
latortuga
Capital One 360 (formerly ING Direct) also offers free checking and savings. I
have not used my associated checking account in approximately 8 years of being
a customer and I've never been charged a fee.

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spindritf
You can almost taste the irony of the hated, exploitative megacorp Walmart
doing more to help poor people and put a check on cheque cashing places than
any politician ever.

~~~
sliverstorm
Remember that Walmart is hated because it appears to be helping on the
surface, but is in fact exploitative below the surface. So... remember that
when you evaluate this new offering. I'm going to lean suspicious for now.

~~~
MiguelHudnandez
There is no reason to be suspicious -- their motives are clear. Exploit the
high-overhead banking economy with lower-cost offerings for their target
demographic.

Their target customers end up living a life filled with transactional cost.
They might pay bills by buying money orders, get paychecks cashed at check
cashing stores. On top of that, they can be time-poor, in that without a
reliable car or without money for gas, they genuinely cannot get across town
to a bank location, or travel an extra few miles to save money on some staple
product. [1]

So, right now, there is a significant cost associated with having no checking
account.

Therefore, if Wal Mart can bring them into their own system, any overhead they
save the customers can come right back into the store. If they can offer the
accounts without a financial loss, it's a no-brainer. Even if they have losses
on the checking accounts, they might make it up by having physical bodies at
Wal Mart more often each month.

[1] "The High Cost of Poverty" [http://www.washingtonpost.com/wp-
dyn/content/article/2009/05...](http://www.washingtonpost.com/wp-
dyn/content/article/2009/05/17/AR2009051702053.html)

PS: Of course they could be evil, but there's no reason they would _have to
be_.

~~~
sliverstorm
That's not the motive, that's the method.

Cribbing from the article, one possible motive:

 _In an uneven economic recovery, Walmart is also pushing to win back
customers it is losing to lower-price retailers_

~~~
spindritf
_It is not from the benevolence of the butcher, the brewer, or the baker that
we expect our dinner, but from their regard to their own interest._

------
navait
The fee seems a bit egregious, even for commercial banking. My bank never
charged me for a checking account, and even reimburses ATM fees.

~~~
jdc0589
ditto. Always been free for me. I didn't know that wasn't the norm.

~~~
jmccree
If you have less than $x balance or $y/mo in direct deposits, most banks
charge a fee. Because what someone who makes less than $1,000/mo really needs
is to pay over $100/year for a checking account. That's not including all the
likely overdraft/returned item fees someone with an average balance of less
than $1,000 is likely to achieve.

How it doesn't violate usury laws to charge someone $35 for a $5 overdraft,
I'll never understand.

~~~
Pxtl
Didn't the gov't kill the usurious overdraft charges? I don't follow American
news too closely anymore but I remember hearing rumbling about that... iirc
that's why American banks started moving over to the model I see here in
Canada - large minimum balance or ~$10/mo in monthly fees.

~~~
oddevan
I'm not sure about the overdraft charges, but they did require the default for
debit cards to "deny" a charge if it would result in an overdraft. So I won't
overdraft my account by accident if, for example, I try to buy a $2 drink
before my paycheck clears. (Happened once...)

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pzxc
I'm in the US, and I did a lot of research on banks and checking accounts
about a year ago when I was trying to find the best setup (for me).

I hardly ever go into a bank branch, so I was willing to sacrifice having that
possibility if it meant lower fees and less service.

I found four good possibilities, and I would recommend any of these to others
if you can get them (drawbacks/caveats in parenthesis):

1\. Charles Schwab (lowest limit on mobile check deposits, was $2000/day max
when I checked) 2\. USAA (available to family members of military only when I
checked) 3\. ING Direct (later bought by Capital One and renamed to Capital
One 360 - this is what I now use) 4\. Simple (formerly banksimple, now just
simple.com)

I was on the waiting list for Simple, but before they gave me the invite I
ended up getting set up with ING Direct, and even though they are now Capital
One 360, nothing about the program has changed and it meets all my needs -
it's great! The best parts, besides the no monthly fees etc which was a
prerequisite for me, is they give you a small credit line attached to your
primary account ($500 to start though you can ask for an increase if you
want), and if you do happen to overdraft they just charge you interest based
on the overdraft amount, which ends up being a few pennies at the end of the
month - no overdraft fees at all. If you don't have the credit line or you go
over, the transactions are just declined.

I still have a Charles Schwab account, because in addition to no monthly fees,
they refund ALL atm fees from anywhere, even the ones that the atm owners
charge. You can literally use a $10-fee atm at like disneyland or on a cruise
ship, and they will refund the fee. I keep a small amount of cash in here for
when I want to get cash from an ATM and don't want to look for one that is
feeless for my regular bank (Capital One 360 which uses AllPoint atms so they
are plentiful, but hey my laziness knows no bounds)

I was never able to try USAA despite hearing great things because no one I
know was in the military.

I was planning to switch to Simple once I was able, but ended up staying with
Capital One 360 since it's great. Oh yeah, another awesome feature you don't
get anywhere else, that started with ING direct but capital one has kept it,
is you can open an unlimited amount of savings accounts. It's really one
savings account in the background, but they treat the amounts separately as if
they are separate accounts, so from the front end it seems that they are. This
is awesome for setting up savings goal, automatic savings deductions for
various purposes (like quarterly tax estimates if you are self-employed), etc.

The stupid employer I'm at wouldn't let me sign up for direct deposit until I
had been working here for 6 months (I know, what kind of policy is that,
right??) -- and even though it's the highest mobile check deposit limit I
could find, Capital One 360 still has a $3000-per-check limit on mobile
deposit. My employer not only wouldn't let me get direct deposit right away,
but pays monthly, so since my paycheck was bigger than the limit I was forced
to go back to a "regular" bank for a few months.

So I got a Bank of America account. They charged me $12 a month for the
privilege of using their services without having direct deposit set up (if I
could set it up I wouldn't need them!). Closed that account as soon as I was
able to get direct deposit, which I set up for my CO-360 account. Branch
manager of BoA was disappointed (ha).

I did move to a new apartment in the middle of that, and needed a cashier's
check or money order for the deposit. Years past had always just gotten a
cashier's check from my bank, they usually let you do like one a month for
free if you had an account -- nope they don't do that anymore. $10 fee. (Screw
that, went to Walmart and got a money order for 49 cents). Also asked about
notarization -- don't need it right now but since I was asking about cashier's
checks anyway thought I'd ask if I could still get something notarized if I
had an account -- nope sorry, they do have a notary but they are only allowed
to notarize official Bank of America documents. Wtf??

Anyway, my BofA account is closed as of a few weeks ago, and I couldn't be
happier to not be their customer anymore. Fully set up with direct deposit to
Capital One 360 now, and that's where I intend to stay for the next decade.
(Unless they start screwing up their deal in which case I'm sure simple would
still love to have me -- only thing I don't like about them is I prefer having
a mastercard debit card rather than visa)

Hope any of this info is useful to somebody.

~~~
enraged_camel
>>I was never able to try USAA despite hearing great things because no one I
know was in the military.

You don't need to know anyone in the military to open a checking account with
USAA.

~~~
downandout
Are you sure? I have looked into several of these things, and I could have
sworn their application asks for some kind of military personnel number.

~~~
Kalium
For years, USAA didn't require military affiliation. That is no longer the
case.

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ck2
Go to a credit union. Free.

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ihsw
Seems they're taking a page from Loblaws and PCFinancial.

[http://pcfinancial.ca](http://pcfinancial.ca)

I havent worked at Loblaws for a long time, but I still use them.

~~~
Pxtl
I have to say, while I like the prices on their products, all the PC family of
non-food services drive me batty with the most amazingly awful customer
service I've ever seen in that sort of service. Individually the CSRs are
generally friendly, but collectively their processes are awful. The phones,
the credit cards, etc.

I still use their services, of course, because I'm a chump and only
encouraging them to continue treating me like crap.

