Tuesday, July 03, 2007

I Won't Follow This Advice #4

Occasionally, I read commercially published articles which provide advice very different to what I have found successful in my own experience. I will be highlighting these articles periodically in a "I Won't Follow This Advice" segment. These segments represent my opinion and one should consult a professional before making any decisions. Here's segment #4.

The article Wal-Mart Moves Into Banking With Debit Card describes a new prepaid debit card service Wal-Mart will be providing to customers.

"Personal finance expert Conrad Ciccotello from Georgia State University said prepaid debit cards can be a boon to low-income consumers who might otherwise be stuck dealing in cash, unable to make such basic transactions as paying for gas at the pump or paying bills online.

'It generally strikes me as positive. In today’s society that is more and more cashless, somebody who doesn’t have access to cashless transaction vehicles is at a disadvantage,' said Ciccotello, who is director of the personal financial planning program at Georgia State’s business college.

The Wal-Mart MoneyCard costs $8.95 to buy and $4.95 for monthly maintenance. Cash can be loaded on the card for free by cashing a payroll or government check at Wal-Mart or direct depositing. Otherwise it costs $4.64 to reload the card."

While I agree with the convenience of paying at the pump or paying online, it surely isn't worth a $8.95 membership fee, $4.95 monthly charge, and $4.64 to reload. That's $4.95 to $9.59 per month for convenience. To me the cost is a big negative. If my checking account charged this much per month, I would be looking for another bank.

In my area, banks can provide equal or better service for lower cost. I recently opened a checking account with a $25 deposit at a regional bank. The account gives me a free debit card, free ATM transactions, free online bill payment and no monthly charge. In addition, the account gave me a $50 bonus when I had payments automatically deposited.

In this case, I can't think of any reason to pay for a service I can get for free.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

Photo Credit: morgueFile.com, Clara Natoli

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC


Dimes said...

HORRIBLE. That reminds me of the H&R Block Emerald MasterCards we were told to sell to customers. The fees weren't as big as the Wal-Mart fees, but there were all sorts of them. Want to withdraw from an ATM? It'll cost ya. Want to add more funds? It'll cost ya. Want to find out your balance? It'll cost ya. Want cash back at a register? It'll cost ya. On and on and on.
I think they target people who have no banking relationship whatsoever, but the same people could be doing better if they weren't so lazy. Laziness is the problem.

Super Saver said...


Thanks for your comment.

I just read an article in Business week about how low income people are the next opportunity for businesses. However, it seems that some companies are using the lack of personal finance in this segment to get excess profits.