8 ms·

Walmart's effort to get customers to build up their savings accounts

159 points by iamchmod 9y ago

egypturnash 9y ago
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 9y ago
  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 9y ago
    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.
    - SamReidHughes 9y ago
      They're benefiting because before they were not saving in the first place.
    - twblalock 9y ago
      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.
      - flukus 9y ago
        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.
        protomyth 9y ago
        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.
        flukus 9y ago
        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.
        rdl 9y ago
        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.
        protomyth 9y ago
        https://mobile.nytimes.com/blogs/dealbook/2013/07/30/over-a-million-are-denied-bank-accounts-for-past-errors/ https://mobile.nytimes.com/blogs/dealbook/2013/07/30/over-a-...
        sigstoat 9y ago
        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.
    - protomyth 9y ago
      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 9y ago
        > 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 9y ago
        I'm sure they pull chexsystems.
        morgante 9y ago
        ChexSystems is different than a credit report. They can clear you even if you don't have any credit or have bad credit.
        protomyth 9y ago
        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.
  - gumby 9y ago
    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.
    - Spooky23 9y ago
      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.
- jmvoodoo 9y ago
  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.
  - qntty 9y ago
    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.
    - twblalock 9y ago
      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.
    - LyndsySimon 9y ago
      > 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.
    - Spooky23 9y ago
      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%.
      - Aloha 9y ago
        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.
tabeth 9y ago
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.
- jmts 9y ago
  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.
  - tabeth 9y ago
    > 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): 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.
fefesafaea 9y ago
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.
- egwynn 9y ago
  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.
- bpodgursky 9y ago
  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 9y ago
    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?
yen223 9y ago
Did I just read an ad for Walmart?
deleted 9y ago
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spking 9y ago
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.
- paulcole 9y ago
  >Don't f*ck with my customers' money! Yeah! That's what the fees are for!
- kevan 9y ago
  >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.
RhysU 9y ago
> 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?
- deleted 9y ago
  [deleted]
- wtvanhest 9y ago
  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 9y ago
    That's under the assumption that people don't want to save any money.
    - VLM 9y ago
      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.
  - rhino369 9y ago
    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.
ilaksh 9y ago
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 9y ago
  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 9y ago
    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?
- flukus 9y ago
  > 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.
cheath 9y ago
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.
gwern 9y ago
The mentioned lottery savings bonds: https://en.wikipedia.org/wiki/Premium_Bonds https://en.wikipedia.org/wiki/Premium_Bonds
kainolophobia 9y ago
>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.
- moonman272 9y ago
  Whats the company?
  - rjeli 9y ago
    longgame.co according to history
- briandear 9y ago
  "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 9y ago
    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.
panzer_wyrm 9y ago
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.
- flukus 9y ago
  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.
  - briandear 9y ago
    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.)
    - alkonaut 9y ago
      > "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.
      - falsedan 9y ago
        > 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.
losteverything 9y ago
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.
Noos 9y ago
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.
Kluny 9y ago
"...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.
xmstr 9y ago
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-lottery-be-the-answer-to-americas-poor-savings-rate/ http://freakonomics.com/podcast/freakonomics-radio-could-a-l...
miraj 9y ago
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
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VLM 9y ago
"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 9y ago
  > 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 9y ago
    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?"
calvinbhai 9y ago
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.
VLM 9y ago
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.
- 9y ago

159 points by iamchmod 9y ago

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 9y ago
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 9y ago
  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.
  - SamReidHughes 9y ago
    They're benefiting because before they were not saving in the first place.
  - twblalock 9y ago
    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.
    - flukus 9y ago
      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.
      - protomyth 9y ago
        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.
        flukus 9y ago
        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.
        rdl 9y ago
        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.
        protomyth 9y ago
        https://mobile.nytimes.com/blogs/dealbook/2013/07/30/over-a-million-are-denied-bank-accounts-for-past-errors/ https://mobile.nytimes.com/blogs/dealbook/2013/07/30/over-a-...
      - sigstoat 9y ago
        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.
  - protomyth 9y ago
    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 9y ago
      > 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 9y ago
        I'm sure they pull chexsystems.
        morgante 9y ago
        ChexSystems is different than a credit report. They can clear you even if you don't have any credit or have bad credit.
      - protomyth 9y ago
        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.
- gumby 9y ago
  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.
  - Spooky23 9y ago
    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.
jmvoodoo 9y ago
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.
- qntty 9y ago
  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.
  - twblalock 9y ago
    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.
  - LyndsySimon 9y ago
    > 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.
  - Spooky23 9y ago
    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%.
    - Aloha 9y ago
      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.

tabeth 9y ago

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.

jmts 9y ago
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.
- tabeth 9y ago
  > 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): 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.

fefesafaea 9y ago

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.

egwynn 9y ago
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.
bpodgursky 9y ago
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 9y ago
  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?

yen223 9y ago

Did I just read an ad for Walmart?

deleted 9y ago

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spking 9y ago

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.

paulcole 9y ago
>Don't f*ck with my customers' money! Yeah! That's what the fees are for!
kevan 9y ago
>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.

RhysU 9y ago

> 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?

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wtvanhest 9y ago
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 9y ago
  That's under the assumption that people don't want to save any money.
  - VLM 9y ago
    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.
- rhino369 9y ago
  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.

ilaksh 9y ago

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 9y ago
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 9y ago
  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?
flukus 9y ago
> 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.

cheath 9y ago

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.

gwern 9y ago

The mentioned lottery savings bonds: https://en.wikipedia.org/wiki/Premium_Bonds https://en.wikipedia.org/wiki/Premium_Bonds

kainolophobia 9y ago

>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.

moonman272 9y ago
Whats the company?
- rjeli 9y ago
  longgame.co according to history
briandear 9y ago
"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 9y ago
  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.

panzer_wyrm 9y ago

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.

flukus 9y ago
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.
- briandear 9y ago
  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.)
  - alkonaut 9y ago
    > "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.
    - falsedan 9y ago
      > 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.

losteverything 9y ago

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.

Noos 9y ago

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.

Kluny 9y ago

"...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.

xmstr 9y ago

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

miraj 9y ago

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

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VLM 9y ago

"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 9y ago
> 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 9y ago
  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?"

calvinbhai 9y ago

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.

VLM 9y ago

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.

9y ago