Wal-Mart and AmEx Hatch Low-Fee Bluebird Card
By Marcia Frellick
October 10, 2012
Wal-Mart and American Express teamed up to offer a head-turning payment option for customers fed up with traditional banks: the Bluebird card.
This week, the financial and retail giants introduced Bluebird, a prepaid debit card that promises no required minimum balance, no monthly maintenance fees, no annual fees, no activation fees and no overdraft fees. The only fees are $2 for ATM withdrawals, though the first one each calendar month will be free, and a $2 fee if you reload the card via a debit card. Read the full card agreement here.
For comparison, Americans pay an average $200 a year in various bank fees, says Wal-Mart Vice President Daniel Eckert, citing a February 2012 Bretton Woods survey.
“Bluebird is our solution to help consumers who currently may be poorly served by traditional banking products,” said Dan Schulman, group president of American Express, in a press release.
American Express may have found a wealth of such consumers in its partnership with Wal-Mart, which has said 85 percent of its daily transactions are done in cash.
Beyond Walmart stores, customers can use the card anywhere American Express is accepted.
How the card works
The Bluebird card works much like other reloadable prepaid cards on the market. Users can get it online for free at Bluebird.com (starting next week — the site isn’t up yet), or at Walmart stores for a $5 fee. However, the card available at Walmart is only a “starter” card — cardholders will still have to go online to set up their accounts and get a permanent card.
Upon set-up, the cardholder must designate a funding source (such as a bank account) from which a minimum of $25 will be withdrawn and loaded onto the card. After that initial load, more money can be added (up to a maximum of $5,000) via direct deposit, cash at Walmart, debit card or bank account. You can also load money via Green Dot’s MoneyPak or InComm’s Vanilla Reload Network Card, although you may incur fees from Green Dot and InComm.
Why consumers want alternatives
Here are some statistics that add to Bluebird’s appeal:
- Banks charged a total of $31.6 billion in 2011 in overdraft fees, according to Moebs Services.
- The average minimum balance necessary to avoid a maintenance fee on a checking account was $723, up 23 percent from last year, according to a September 2012 Bankrate study.
- One in four consumers already conducts some or all of financial business outside traditional banks, the Federal Deposit Insurance Corp. (FDIC) says.
In addition to the fees it doesn’t have, the card has extra features more typically associated with credit cards. For instance, consumers will have access to American Express customer service and roadside assistance.
It also opens up mobile possibilities for the unbanked. That means a friend can send money directly to your Bluebird account to split a dinner bill via a person-to-person (P2P) mobile app. You can also take a picture of the check your uncle sent you for your birthday and deposit it straight into your account from your smartphone.
Despite its perks, the Bluebird card is a prepaid card and therefore lands in largely unregulated territory — although the Consumer Financial Protection Bureau is working to change that by establishing rules for the prepaid industry.
In the meantime, consumer advocates caution that prepaid cards may not have the same federal protections that credit cards have. Bluebird, for instance, is not backed by the FDIC, though it is backed “100 percent” by American Express Travel-Related Services Co., Schulman said in a webcast announcing the card.
Bluebird will be available next week online at Bluebird.com and at 4,000 Walmart stores.