
Walmart's effort to get customers to build up their savings accounts - iamchmod
https://www.theatlantic.com/magazine/archive/2017/05/how-to-trick-people-into-saving-money/521421/?single_page=true
======
fefesafaea
Kind of fucked up that the article doesn't mention the fees associated with
these cards until like 3/4 of the way into the article.

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.

~~~
bpodgursky
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.

~~~
asafira
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?

~~~
ricardonunez
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.

~~~
snuxoll
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.

~~~
shawn-butler
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.

~~~
snuxoll
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.

------
spking
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.

~~~
kevan
>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.

------
VLM
"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.

~~~
coolgeek
> 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

~~~
VLM
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?"

------
tabeth
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.

~~~
bane
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.

~~~
sithadmin
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.

~~~
bane
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.

------
ilaksh
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.

~~~
1123581321
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.

~~~
BearGoesChirp
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?

------
egypturnash
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...

~~~
henryfjordan
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?

~~~
oconnore
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.

~~~
protomyth
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.

~~~
morgante
> 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).

~~~
rdl
I'm sure they pull chexsystems.

~~~
morgante
ChexSystems is different than a credit report. They can clear you even if you
don't have any credit or have bad credit.

------
panzer_wyrm
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.

~~~
stephen_g
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.

~~~
SyneRyder
> _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...](https://www.commbank.com.au/personal/kids/school-banking.html)

> _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.

~~~
falsedan
> _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%…

~~~
SyneRyder
> _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.)

------
kainolophobia
>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.

~~~
briandear
"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.

~~~
kainolophobia
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.

------
yen223
Did I just read an ad for Walmart?

------
losteverything
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.

------
xmstr
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...](http://freakonomics.com/podcast/freakonomics-radio-could-a-lottery-be-
the-answer-to-americas-poor-savings-rate/)

------
RhysU
> 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?

~~~
wtvanhest
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.

~~~
morgante
That's under the assumption that people don't want to save any money.

~~~
VLM
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.

------
gwern
The mentioned lottery savings bonds:
[https://en.wikipedia.org/wiki/Premium_Bonds](https://en.wikipedia.org/wiki/Premium_Bonds)

------
Kluny
"...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.

------
cheath
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.

------
calvinbhai
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.

------
miraj
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)

------
VLM
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.

~~~
jpindar
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.

------
Noos
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.

