[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.

[johndotsun]

>It is $5/mo for accounts with less than $1000, but you're not going to get better than that at a bank.

That might be true of the big national banks with a branch in every town small and big alike but it's not true of the smaller local banks and credit unions. My checking account at my credit union is free as long as I maintain a balance of at least 5 dollars. It has branches in the area with decent hours, it has an excellent online banking site, it has excellent customer service. When I walk in to do some business I'm not bombarded with sales pressure to waste my money in exotic types of accounts that the credit union offers that do more for the bottom line of the credit union than for me. If I travel across the country I can access my money through a national network of similar credit unions without paying any fees.

To my understanding this is extremely common among credit unions in other areas.

Oh and to reply to one of your comments below, my credit was extremely poor when I opened my account. I received nothing but highly professional customer service regardless.

[sgs1370]

Not all credit unions are equal, so just watch out. I had been actively using my efcu account then switched to usaa bank for the bulk of activity, and - my mistake - wasn't watching the efcu cu account closely enough and they started charging $5/month inactivity fees.

[nxc18]

Skip the bank. Credit Unions are where its at: nation-wide shared branches, fee-free checking, sane overdraft policies, no minimum balances, reasonable interest payments, and in my experience, not a single instance of them blatantly trying to screw customers.

I just checked and my CU has a $30 overdraft fee, which can be disabled if you're willing to let things bounce.

[coredog64]

CU member, and I'll mention one downside. Unless your credit union has a local branch, you will need to get used to all kinds of weird restrictions on what your satellite branch can do for you.

I just bought a car, and the satellite branch could only give me $1000 in cash. I had to beg the seller to take a cashier's check for the balance.

Sometimes the systems don't integrate well and so they have a hard time figuring out which account is which.

Finally, even though my spouse is listed as a co-owner of the account, there is very little she can do at a satellite branch (or even over the telephone to the main office).

[moftz]

Why don't you just close your account your CU and open up an account at the one closest to you? I have no loyalty to my bank. If I move and there's no branches around me, I'll just move to someone else that is local.

[kevin_thibedeau]

Try opening a CU account without credit.

[memonkey]

I didn't have credit when I opened my account with a CU. I don't even think they ran a credit check.

[dragonwriter]

I had little (and mostly bad) credit when I opened my first CU account. Wasn't a problem, at all.

It might, OTOH, be hard with the same kind of bad account history that will stop you from being able to open a regular bank account, but that's different from regular no credit or bad credit.

[adrr]

Most small and medium size banks don't pull your credit report. Its Chex Systems to see if you have any deposit accounts in bad standing. Some also pull fraud scores from experian or equifax as well to see if you information has been used in identity theft recently.

[ryanhuff]

No credit, or bad credit?

[Pseudosudowoodo]

I can confirm at least for my union, they had no issue with my very bad credit. They were more concerned with recent debts and rent, things like that.

Background: For the record, it was due to defaulting on a student loan. It's taken care of now, but back then I couldn't afford the 10% interest rate.

[morgante]

> It is $5/mo for accounts with less than $1000, but you're not going to get better than that at a bank.

Sure you are. I have many accounts with less than that. Don't spread FUD.

Overdraft fees are easy to avoid if you just tell them to decline overdrafts.

[TheSpiceIsLife]

Your comment would have been better if you had linked to examples rather than accusing the parent of spreading FUD.

Maybe you're a student or have multiple products (different types of accounts, credit cards, home loans, term deposits) with your bank?

I can't get a $0 / month account for everyday banking from my bank because I have a special rate home loan. They have a savings account that's $0 / month but you can only transfer from / to it via a regular $4 / month account.

[morgante]

Here are my various no-fee checking accounts:

* http://content.schwab.com/web/retail/public/get-started/chec... - amazing checking account, reimburses all ATM fees

* https://www.capitalone.com/bank/360checking-guide/

* https://www.aspiration.com/summit/

I do have a few other ones but they're based on relationship banking. All of the above have no fee and no minimum.

[kevan]

Step 2 in this analysis: Would you be able to get any of those accounts with a low credit score? I'm pretty sure when I opened my Schwab checking account they ran a credit check.

[morgante]

I've had most of those accounts since I had virtually no credit (and a low/nonexistent credit score). That being said, if you have a negative Chexsystems report they'll be hard to get.

I'm not trying to say the unbanked don't have barriers. I just didn't like the assertion that free checking is impossible, since that's what leads to even people on HN paying needless maintenance fees.

[lazyasciiart]

Schwab runs a credit check for that account because they also open a brokerage account for you that allows you some ability to float funds.

[dajohnson89]

Bank of America customer here. Not aware of any fee being applied to my checking account.

[fefesafaea]

It's important to note that many large banks actively discourage customers from opting out of overdrafts. So much so that they even have scripts they make their tellers recite.

For example, if you attempt to opt out, the teller might say, "but what if you are at the gas pump and can't get gas because you have opted out of overdrafts?" The subtext being, "wouldn't it be better to get enough gas to get home and in the process incur a 40 dollar fee."

[ars]

Allowing overdraft for checks can save you money though since you'd have to pay the depositors fee otherwise.

A good bank let's you disable overdraft for debit card while enabling it for checks.

[snuxoll]

Solution: don't write checks? I use cashier's checks wherever possible, I get them for free and there's never a potential for overdraft nightmares since it comes out of my account right away - the only time I've written a check in recent memory is the registration fee for my daughter's preschool since my wife wanted to pay it on-the-spot if she liked the place.

[DamnYuppie]

I am willing to wager that those accounts have requirements for automated deposits into them and or are tied to other accounts that have similar balance/deposit requirements.

[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?

[johnm1019]

A great example is Ally Bank (happy customer here!)

https://www.ally.com/bank/interest-checking-account/#fees

[pilom]

Seconded! Been a customer for 10 years and I'm still extremely happy. I can't say that about any other business I've ever worked with.

[bpodgursky]

There aren't many anymore. Banks mostly eliminated or heavily restricted free checking accounts when overdraft fees got capped.

You may be able to find a couple credit unions that do this, but you still have minimum account balances and other hurdles that make it difficult to open an account if you have bad credit and little money (not to mention time or financial savvy).

[nxc18]

My credit union requires I have a savings account with $5.00. The overdraft fee is $30. There are no recurring costs outside of that. Both checking and savings accounts earn interest - much less for the checking account - rather than costing me money.

I don't know about the credit check part; I set up with my parents years ago so that may have exempted me as I didn't have any credit history at the time.

[ErrantX]

> There aren't many any more...

...in the US.

In the UK its the opposite; the majority of checking accounts are free, some premium accounts charge a fee but generally come with rewards.

Overdrafts; there are fees for unarranged overdrafts, but its reasonably trivial to arrange a limit and this is generally fee-less (naturally you pay interest; mine is 1.2% calculated daily)

ATMs are largely free regardless of who your bank is.

[briandear]

In France they sure aren't free. Banks even charge a monthly fee for a debit card in addition to a monthly account maintenance fee. Of course banking in the France is stuck in the 1980s with many banking transactions requiring an actual visit to your specific bank branch and a consultation with your personal banker.

[ErrantX]

Interesting; my perspective (working in the finance industry) has been that European banks are ahead of the curve with technology and, importantly, technology for customers. It sounds like maybe not?

[JustSomeNobody]

Not really. It's very expensive to be poor (in the U.S. at least).

[pacaro]

It grates for me when I withdraw cash. The most convenient ATM for me charges $3 when I withdraw money. My approach to this is to never pull less than $300, so the fee is 1% or less. But for people who are pulling $20 because that's what they have right now, this is a 15% tax. It's a perfect example of regressive taxation. For me it's a minor inconvenience, for most Americans it's a significant burden.

[thinkling]

If you use your debit card to pay for groceries, you can get $40-60 cash (or more) each time without paying a fee.

[cafard]

My debit card comes through a credit union. As long as I use the ATM of another credit union in the same network, I pay no fee. As it happens, there is such an ATM on the side of the building where I work, and for that matter I think there was one about half a mile from my late mother-in-law's house a hundred miles from here. I do resent paying $3 to Bank of America because I forgot to withdraw money before I left for work.

[kevin_thibedeau]

Don't use out-of-network ATMs. Especially privately owned ATMs as they are far more vulnerable to skimming.

[jjeaff]

Get an Ally account. Problem solved. I believe you get reimbursed for up to 10 withdrawals a month or so.

[wavefunction]

Often times banking services like this make money off of incidental fees like balance inquiries that would normally be free, or fees to call an agent.

[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.

[astrange]

If you never have to make cash deposits:

https://www.capitalone.com/checking-accounts/online-checking...

[r00fus]

Technically true, many banks charge a monthly fee, but most/all credit unions do not.

What's the benefit of personal banking through an actual bank over a credit union? I see none currently except it's a bit more difficult to send/receive money internationally through mine (I'm fairly sure it isn't all CU's that have this issue).

[rdl]

They could probably win on goodwill if they waived that fee freely for anyone who walks into a Walmart every month, or makes a single transaction, or is part of some group considered vulnerable or worth subsidizing (veterans, benefits recipients, etc.)

[tastythrowaway2]

I literally have 3 accounts that are better than that, also with no ATM fees.

[FullMtlAlcoholc]

> It is $5/mo for accounts with less than $1000, but you're not going to get better than that at a bank.

A simple google search for free checking account gave me 20+ such banks in the first result.

[batiudrami]

>It is $5/mo for accounts with less than $1000, but you're not going to get better than that at a bank.

What? It costs money to lend your money to the bank in the US?

[maxerickson]

At lots of places, yes. They usually wave the fees for modest account minimums or accounts that regularly deposit paychecks.

There are enough banks/credit unions that don't charge fees that it is more of a way of asking people not to open an account than it is a problem with access to banking.

[thinkling]

Not just in the US. I encountered fees in several countries in Europe (definitely NL).

[falsedan]

Australian ATM fees are ridiculous, $0.50 for in-network and $2 for out (at CBA). On top of 0% interest too.

[briandear]

France for sure. Banking is ridiculous here in terms of fees.

[fefesafaea]

I read it. Maybe you should go to a store and actually get one of these cards, then let me know how it works out.

Seriously though, these cards, like many "financial products" come with a variety of price points and fee structures. If you re-read my comment, you'll see that I didn't claim my figures were definitive, but they are definitely in the ballpark.

[bpodgursky]

Um, no, you completely made up the numbers, making no attempt to source from the article which laid them out clearly. It's not the same "ballpark".

- It's $1 for the card, not "$5-$10"

- It's free cash withdrawal, not $3

- It's free deposits from direct deposit or government benefits, not $3

You are not approaching this remotely honestly.

[fefesafaea]

https://www.walmartmoneycard.com/account/legal-info-page?pro...

As I said, there are a variety of cards on offer, from a variety of sources, but they all seem to fall within the same range cost-wise, even if the fees are structured differently.

It's as if we are arguing about cars, and you want to debate whether the pinto in question had power-windows or not, while ignoring the fact that it will explode in a routine accident.

[bpodgursky]

Dude, you really need to think carefully about whether you are approaching this topic honestly, or if you are hunting for reasons to reinforce your belief that this card is a scam.

The precise things you claimed about this card are _not true_. Those are facts. If you want to debate, use _facts_.

Nobody is denying that WalMart _could_, if they wanted to, offer a savings card which is a scam. But also consider their motives going into this, compared to the average bank:

- Wal-Mart's goal is to get people to spend money at Wal Mart. This card makes it easy to spend money at Wal-Mart.

- Banks exist entirely from interest on saved money, and on fees.

Since these customers have very little saved money (the whole point of this article), the money made is entirely from fees, unless you have another reason to get people to use the card. Wal-Mart does -- it is totally reasonable for them to run this program at-cost to attract customers. You cannot say the same for any bank.

If you want to disagree with the merits of people spending money at Wal-Mart, that's a different topic. But the evidence points to this card being a good deal for an underserved part of the population.

[fefesafaea]

Not sure why you are accusing me of intellectual dishonesty, unless the goal is to derail the conversation.

You are right to say that a few of the specifics I gave were not correct. I was clearly not arguing that. However, the specifics you gave were not 100% correct either. For instance, if you go to an atm machine in a wal-mart and attempt to withdraw cash, you will be charged 3 dollars. The fee breakdown I linked bears this out. A fee breakdown, I might add, that is several pages removed from the main page describing the class of card in question.

[orf]

As someone from the UK I always find it astounding that Americans are used to paying money to.. withdraw or deposit their money. How did this become the norm? I find it a bit disgusting actually.

The only cash machines that charge over here that I've seen are rented ones at packed events (clubs, concerts etc).

[mikeash]

It's not the norm. Most Americans (at least in my experience) will go out of their way to use an ATM that doesn't charge them. Accordingly, picking a bank with a large ATM network is a major consideration when choosing a bank. Some smaller banks compete with this by reimbursing fees charged by out-of-network ATMs, making all ATMs effectively free.

It is certainly possible to pay for those services, but it's not normal. Some people let it happen out of laziness, or due to not being aware that they can do better.

We do have a fees problem, but it's mostly with other services. For example, many banks will charge some outrageous amount (like $5, outrageous compared their cost) to give you an electronic copy of a past bank statement. High overdraft fees are common. If you accidentally use your debit card to make a purchase that exceeds what you have in your account, the bank will often charge you a ~$35 fee rather than reject the transaction. This is optional, but they push it hard and sell it as a "service," since it means you're never left unable to complete your transaction. Never mind that being out a bunch of money is bad too.

Even worse, some banks (at least for a while) would intentionally maximize your overdraft fees by sorting your transactions on any give day from largest to smallest before applying them. For example, imagine if you have $99 in your account, and you use your debit card to make purchases, in order, of $1, $1, $1, and $100. The last transaction should overdraw the account, hit you with a $35 fee, and your balance will be -$39, right? Wrong! They'll run the $100 transaction first, overdrawing the account, and then run the $1 transactions on the overdrawn account. Net result: four $35 fees and a balance of -$144.

So yes, many of our banks suck, especially larger ones, but it's not quite as bad as everyone paying to withdraw and deposit.

[snuxoll]

I believe the CFPB has at least put the fear of god into most banks, at the very least Wells Fargo changed from largest-first to time-of-transaction ordering for debits from the account in the past couple years - and I believe most of the other big banks have done so as well.

Of course, the CFPB is looking pretty dead at this point, so who knows what they'll do after Trump dismantles it.

[AlwaysRock]

I've got a Charles Schwab account mainly because it refunds all my ATM fees at the end of the month. It's great never having to run around looking for the right brand of ATM.

[CaptainZapp]

I was amused about cash machines at major English banks blurting out:

FREE CASH

Of course that unfortunately only means that you're not charged for the withdrawel, but the cash doesn't really come free.

[theklub]

I don't think it is the norm. Only time I've paid fees is at the ATM.

[Symbiote]

ATM fees are unusual in the UK, as the parent post said, though we use the term "cash machine".

Using a cash machine is free, for the majority of cases — those in banks, supermarkets, shopping centres, railway stations and so on are run by one of the banks and are free for customers of all banks to use. It doesn't matter if the machine or customer is with/is a major bank or a small one, they're all on the same network and charge the same: £0.

The exception is captive markets. Cash machines within a stadium, nightclub or a convenience store often charge. I've never used one of these, it's so easy to avoid doing so.

[moftz]

The fee isn't a huge deal the times I've needed an ATM and my bank didn't have any of theirs nearby. It's a couple bucks which isn't too bad.

Free would be nice but I can understand why banks would charge non-customers fees. If your ATM is in a very high traffic and convenient place, you are going to be servicing and refilling the machine more often which costs more money. If you can control the usage a bit by charging non-customers a fee then you can reduce service costs.

[Symbiote]

In Britain, I think the banks charge each other. According to [1], 98% of withdrawls in the UK are free.

I assume this averages out amongst the large banks, who probably each have their fair share of convenient places. The small banks pay for their customers' convenience; presumably a very worthwhile cost for some of the new banks or Internet-only banks.

[1] http://www.link.co.uk/

[2] http://www.link.co.uk/about-link/statistics/

[TDL]

People usually pay fees for using ATMs outside their banks network (some banks join broader networks in order to offer more ATM locations to their customers.)

[_asummers]

A few banks (USAA, Schwaab, others) offer ATM fee reimbursal, but most US ATMs will charge you unless you're part of that bank's network. It's really not the best, especially when you're at cash only places, which seem to be popping up a lot near me.

[beejiu]

In the UK, the vast majority of ATMs are free.

[rtkwe]

One reason I think is that a lot of the time you're not withdrawing money from your bank's ATM or one associated with any bank at all, partially because of sheer land mass, so the operator has to have some way of recooping the expenses of operating those machines. A lot of banks provide free withdraws from their own ATMs and some even just the fees for their customers like my bank.

[chrisseaton]

> I find it a bit disgusting actually

But withdrawing and depositing money is a service that costs the banks money to do doesn't it? I'm can see why you don't like but I can't see it as morally 'disgusting'.

Would you look after someone else's meagre current account for them, and give it back on demand, for free? I wouldn't.

I don't really know who covers that cost in the UK. It's certainly not interest they earn lending out our savings is it? Especially this type of customer since they have no savings because the point of the card is to encourage them to do so, and since interest rates are so low.

Who is paying to cover the costs of a basic bank account of someone who doesn't save? I've no idea.

[orf]

> But withdrawing and depositing money is a service that costs the banks money to do doesn't it?

It's literally their job. It's their function. Why am I reimbursing them? I'm giving them my money essentially to invest, why am I also paying them to support basic business functions on my money, with my money, while they make money using my money?

It's easy to say "hurr durr why are you paying them for a service they provide, who does that??" but that's missing the point. Banks are a special case.

> I can't see it as morally 'disgusting'.

It disproportionately affects the poor, and for no real reason than 'I can charge this so I will'. Apparently some places charge you to even check your balance? What the hell.

> I don't really know who covers that cost in the UK

The big, fat, rich banks do. Because the total cost of running all their ATM's is a fraction of a rounding error on their yearly turnover.

[stult]

Historically, retail banks made their money off of the spread between their loan interest rate and the rate they pay out on deposits. So they borrow from your deposits at 2% and loan it out at 5%, pocketing the 3% difference. Over the past 20 or 30 years, extremely low interest rates and competition with money market funds and other more complex savings vehicles have reduced depository interest to essentially nothing, which sets a ceiling for the spread. So for a bank to make money off a regular joe who doesn't have enough money to access investment banking services, they need to charge fees to make a profit. For example, if you have an average $1000 in your account, the bank may only make $10 off of that in a year. Many lower end clients, the ones who tend to pay high fees for overdrafts, have even less money than that deposited on average. Also it's worth pointing out that most banks charge withdrawal fees only if you use another bank's ATM. It's entirely possible to have a checking or savings account at a bank and never pay significant fees if you don't overdraft or drop below minimum amounts. Of course, those issues tend to affect poorer customers disproportionately, but it's not without reason even if it is problematic socially.

[dmurray]

> So they borrow from your deposits at 2% and loan it out at 5%, pocketing the 3% difference. Over the past 20 or 30 years, extremely low interest rates and competition with money market funds and other more complex savings vehicles have reduced depository interest to essentially nothing, which sets a ceiling for the spread.

It sets a floor for the spread, not a ceiling. All else being equal, the bank should make more money when the amount of interest it has to pay its customers drops.

[chrisseaton]

> I'm giving them my money essentially to invest

But what about those people who aren't giving the bank any meaningful capital to invest? What is the bank getting in return in that case?

Or are you arguing that banks should be forced to provide it as a kind of social service even if they don't earn anything? I can understand that kind of point of view.

[CaptainZapp]

  Or are you arguing that banks should be forced to provide it as a kind of social service even if they don't earn anything?

Since banks, especially systemic critical, large banks make a shit ton of money based on an implicit guarantee by the tax payer, yes, I'd argue exactly that.

[orf]

The answer to "not enough people are giving banks capital to invest" is not "charge people more", it's to work out why nobody is putting their money in banks. Could the charges be a factor? Or a paycheck-to-paycheck economy?

The people not giving the bank any meaningful capital are going to cost them much/anything,because it's not as if Joe Bloggs with $500 in his account is going to be doing a thousand withdrawals and balance checks a month.

The point is the banking fees hit those who can least afford to pay them the most. It doesn't have to be like that, and I can understand a kind of point of view that supports it.

[coredog64]

In many countries, this limited bank runs out of the post office. TBH, that isn't a terrible idea for the US. It would shore up the USPS, which primarily makes money by delivering junk mail, and it provides lower cost banking for those who would wind up paying check cashing fees.

[fefesafaea]

At the scale larger banks are operating at, you could argue that even customers storing a few dollars each represent a significant block of capital in aggregate.

It's also clear that banks aren't losing money. What's at issue is how they earn their money and at whose expense.

[literallycancer]

So, where I live there's at least 5 different banks that offer free accounts, domestic transfers are free, and I think about three of them offer free withdrawals from any ATM in the country. Withdrawing from a foreign ATM in Europe is like 0.3 EUR. Oh and they give you a card for free, of course.

And it's not like they are about to go out of business either.

[Fifer82]

When banking becomes optional, I agree, however I need a bank and I ain't paying to take money out of it. When banking is optional, by all means they may charge, but I will take my cash in £20 pound notes in Royal Mail Special Delivery at the end of the month cheers!

[chrisseaton]

I can't understand this point of view. Food isn't optional, and you still have to pay for that. Why should banking be free?

[nightcracker]

Those are the costs associated with running a bank. It's paid for by giving them access to our capital, that they can use to invest.

Have we forgotten what a bank is for? It's to conveniently and safely store money. Part of that convenience is to withdraw and store money at many locations. If a bank didn't offer that they wouldn't get my money.

[rhino369]

"Free checking" is a relatively new practice in banking that really only caught fire after ATMs were invented. Banks would charge fees on transactions--like most financial services do.

Even now, most free checking accounts only require a certain amount of money, transactions they collect fees on, etc.

With interest rates so low, they don't make much just holding onto 500 dollars for someone.

Savings accounts had less fees, but you couldn't use them to write checks out of, etc.

[chrisseaton]

> It's paid for by giving them access to our capital, that they can use to invest.

What capital? The people referred to in this article don't have any savings. Many working class people have no savings at all, and only a few thousand in their current accounts.

[alkonaut]

A person being a customer of a bank means the bank has first access to that persons business when they need mortgages, other loans, home insurance, buying funds for retirement savings etc.

I suppse where bank accounts are free including services like ATM that might be an indication that banks compete for all customers - which might ni turn be an indication that all customers are reasonably likely to buy financial products such as taking loans or savings products in the future.

[watwut]

Which does not make this offer reasonable, it is still ripoff. They are better off keeping money in box at home.

Criticising this offer is as valid as criticising any other expensive and bad service.

[psyc]

Do believe that banks are setting their fees based on their associated costs?

[fefesafaea]

I can't give a super accurate history of how we got here, but it seems as though it's been a gradual process. Once the banks saw that people at bars, casinos, and high end hotels would pay these 'convenience' fees, they said to themselves, "why not do this everywhere?"

It also ties in to how banks are regulated. Now again, I'm not super well versed in the history here, but as I understand it, after the stock market crash in the 20's, congress passed the Glass-Steagall act which, among other things, said that the banks either had to be an investment bank, or a commercial bank, but not both. That way the commercial banks, which are holding regular folks money, can't gamble it all away. That seemed to work pretty well, so much so that congress was later convinced to repeal large portions of Glass-Steagall.

Once that happened, investment bank culture, which never really left commercial banks, once again came to prominence, along with it's emphasis on making money for shareholders.

The reason I mention all that is to say that during Glass-Steagall commercial banks had to go back to making money slowly but surely through giving out safe loans and charging modest fees for basic services. In the meantime, their shareholders, having had a taste of the large dividends generated by investment fees and the like, came to expect more than the safe, modest returns commercial banks used to provide. In order to appease investors, commercial banks then had to look for other ways of generating profits. That's where things like atm fees, excessive overdraft charges, monthly checking account fees, and the like come in.

The fees and stuff actually got so bad that congress passed a law mandating that the banks had to allow people to opt out of overdrafts, among other things. Unfortunately, this law had been kicking around for several years by the time it got passed, so the banks had plenty of time to weaken it and/or find work arounds. For instance, where you used to get a single overdraft charge for each time you overdrafted, many banks went to a system where you got a daily charge for every day your account was in the negative. I've literally seen someone crying in the bank upon being told that what should have been a single $40 charge had grown in the course of a week or so into a $400 charge. Sadly, this is just one of many such examples of how commercial banks have changed their practices to prioritize profits over public service.

Hope that all made sense. As I said, I'm not a historian, and a lot of the stuff I discuss is widely debated, but if you find it interesting there's a lot of good info on wikipedia and youtube, not to mention your local library. :)

[egwynn]

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.

[kirykl]

Bluebird, a Walmart/Amex prepaid product has $0 fees for nearly everything (including even free foreign currency transactions). And offers free checking for the 'unbanked'. https://www.bluebird.com/#fee-chart

[protomyth]

Is there data on the number of CU's that don't charge fees because I haven't found one that doesn't charge overdraft and have seen a monthly low aggregate balance fee?

[zanny]

My credit union has a $5 minimum savings balance. That is it. No monthly fees, but it does have an overdraft fee. It is going to be exceedingly hard to find any bank that doesn't have overdraft fees - that is where a lot of their revenue comes from.

[fefesafaea]

I couldn't say, but would be interested to find out. As far as CU's are concerned, I'll admit that I'm speaking anecdotally.

Obviously each CU is different, and I can't really speak to the specific terms that each one offers, but overall they seem to be more attractive than the terms offered by the large chain banks and the payday lender style banks that originated the style of debit cards discussed in the article.

[reading-at-work]

And yet, thousands of people who started using the cards have increased their savings more than they would have otherwise. Yes a credit union is preferable, but the point is that this demographic of people wasn't using them (or regular banks) and that these cards have encouraged better behavior through a new psychological angle. If the net result is positive, I wouldn't get hung up on the fees.

[Spoom]

If at all possible, people in this sort of situation would be much better served by joining a credit union.

I was under the impression that most people using these cards were using them because:

a) They distrusted banks because of a prior history of being screwed by them, or

b) They were unbankable because of a ChexSystems report preventing them from being able to open a traditional bank account.

Is this not the case?

[nradov]

Regarding point "a", credit unions are specifically not banks. They have a separate legal structure.

[Spoom]

I very much doubt that the people affected by point "a" above would consider them different.