Oct 11, 2012
Walmart’s New Prepaid Debit Card Might Not Be Terrible
It sounds crazy, but there may be such a thing as a good prepaid card.
To say it nicely, I’ve been very skeptical of prepaid debit cards in the past (I previously voiced my feelings in an article titled “Negro Open a Damn Checking Account”), but the new Walmart Bluebird Card might just be a card worth having.
I will forever maintain that prepaid checking cards should never—repeat never—be a substitute for having full-service checking and savings accounts, because they don’t help credit or encourage saving or proper financial planning. Having said that, the new Bluebird doesn't suck.
My main beef with prepaid cards is that they charge customers fees for things that should be and are free at most banks and credit unions. Because it’s being rolled out by Walmart and American Express, Bluebird managed to cut the stupefying charges that generally come standard with “alternative financial services.”
It has no monthly maintenance fees, it’s free to load money on via direct deposit, cash or transfer from a bank account. The card also has no fees for in-network ATMs—kind of like a banking HMO—and doesn’t allow overdrafts, thereby eliminating overdraft fees.
So, why offer a card with virtually no fees—it does cost $5 to purchase in-store and they do charge $2 if customers want to use a debit card to load money onto it, but I’m not sure why anyone would do that—when other issuers are making more money than they know what to do with by imposing draconian fees?
In addition to the fact that the Consumer Financial Protection Bureau will probably regulate most existing prepaid cards out of business, NerdWallet detailed three big wins for Walmart and AmEx on the deal.
“[T]he American Express-Walmart partnership has the possibility to generate revenue beyond simply collecting fees:
- Cash loads are free at Walmart stores, driving traffic and potentially increasing in-store sales.
- Walmart provides American Express the opportunity to get in front of a new customer base.
- American Express earns revenue from interchange fees, assessed on a merchant every time a customer uses plastic.”
AmEx knows just how serious the CFPB is. The company got smacked for $85 million by the bureau just a few days ago.