When reading about this proposal for Walmart banking originally I took an attitude of wait-and-see.
Here’s the New York Times story about Walmart’s new offering: “Walmart Prepares to Offer Low-Cost Checking Accounts.”
Here comes Wal-Bank.
After years of thwarted efforts to break into banking, Walmart is making its biggest foray yet into everyday financial services.
Walmart, the nation’s largest retailer, is teaming up with Green Dot, known for its prepaid payment cards, to supply checking accounts to almost anyone over 18 who passes an ID check.
Daniel Eckert, senior vice president at Walmart, said on Tuesday that the accounts would be available nationwide by the end of October. The accounts are intended to be low-cost alternatives to traditional bank checking accounts, with no fees for overdrafts or bounced checks and no minimum account balance.
In comparison, a basic checking account at Citibank charges $12 if a check is returned and $34 for overdrafts.
The new accounts from Green Dot, called GoBank, will cost $8.95 a month if they have direct deposits totaling less than $500 a month. Mr. Eckert said that most people on Social Security or fixed pensions would qualify.
Walmart haters will find reasons to attack the idea, but Dr. Gary North brings focus on two ideas which I believe could be very positive:
1. Banks hit folks with $32-billion in overdraft fees in 2013—many who paid are not completely irresponsible, they simply made a mistake, or had a vendor who made a mistake. These fees often put someone living on a very thin financial margin into a tailspin from which it’s hard to recover—$30 or $40 can be devastating.
2. Check-cashing stores have proliferated, and though I won’t go so far as to say they should be illegal, I’m glad Walmart’s idea will likely put many of them out of business—they’ve been popping up like noxious weeds, providing a service that is lucrative for them, but not in the overall best interests of the poor.
I know many of you readers will not see the appeal of this sort of banking offer when you have checking accounts that don’t involve a monthly fee. Obviously you have choices. There are some who don’t have these options. I know my current bank charges me more than Walmart’s price if my balance dips below their arbitrary minimums. The reality is that many people don’t have accounts at all, and this will be a help. More choices are almost always good.
I’m not sure how the “no overdraft fee” thing will work, but that may be the biggest feature for many who are often living on the edge. Seems WM would get killed with some folks, but… they’ve obviously worked out a business model…
So, again, I’ll stand back and see how it goes. Perhaps one day soon I’ll even move my checking account there. When I researched banks at the height of the 2008 collapse, the most responsible institution in my area (by far!) was the one chosen to be inside Walmart.
It’s about time sanity, and a focus on customers returned to banking.