Low-cost checking accounts
Wal-Mart is rolling out GoBank, a low-cost alternative to traditional checking accounts, but several national and local institutions already offer cheaper options. Here’s a comparison of estimated annual costs, based on monthly and overdraft fees:
Institution / Account / Monthly fee / Overdraft fee / Annual cost
Capital One / 360* Interest Checking / $0 / $0 / $0
American Express/Wal-Mart** / Bluebird / $0 / $0 / $0
Ally Bank* / Interest Checking / $0 / $9 / $27
Chase** / Chase Liquid / $4.95 / $0 / $59
Moven** / Moven / $5.95 / $0 / $71
Charles Schwab Bank* / Interest Checking / $0 / $25 / $75
Delta Community Credit Union / Checking / $0 / $25 / $85
USAA Federal Savings Bank / Secure Checking / $0 / $29 / $87
Bank of Atlanta / Free Checking / $0 / $30 / $90
Georgia’s Own Credit Union / All Access Checking / $0 / $30 / $90
Associated Credit Union / Basic Checking / $0 / $30 / $90
Fifth Third Bank / eAccess Account / $0 / $25 / $99
FNBO Direct* / Interest Checking / $0 / $33 / $99
First Citizens Bank & Trust / Free Checking / $0 / $35 / $105
United Community Bank / Golden Checking / $0 / $35 / $105
CDC Federal Credit Union / Simply Checking / $0 / $35 / $105
CornerstoneBank / Free Checking / $0 / $35 / $105
Wal-Mart/GreenDot** / GoBank / $8.95 / $0 / $107
Guaranty Bank / Free & Easy Checking / $0 / $37 / $111
Bank of the Ozarks / Free Checking / $4.95 / $35 / $164
Note: Estimates assume customers don’t maintain balances high enough to avoid monthly fees and have three overdrafts in a year.
* Online account
** Reloadable debit card
Source: FindABetterBank.com; Bankrate.com
Later this month Wal-Mart is rolling out a digital bank account it is billing as a cheaper, game-changing alternative to traditional checking accounts that almost anyone can qualify for.
Wal-Mart’s new offering, called GoBank, will allow customers to make payments using a debit card or their smartphone, with no minimum balance and no overdraft fees, compared with $35 for bounced checks at many banks. The account charges an $8.95 monthly fee unless customers make direct deposits each month of at least $500.
Wal-Mart is partnering with Pasadena, Calif.-based Green Dot, a prepaid debit card company, to offer the account.
However, The Atlanta Journal-Constitution took a look around and discovered that metro Atlantans have quite a few cheaper options for checking accounts, especially if they don’t bounce checks very often. In terms of annual costs, Wal-Mart’s new GoBank account ranked behind more than a dozen accounts offered nationally online or locally by several credit unions and banks.
“They’re probably going to find a cheaper option, provided they don’t overdraft the account,” said Mike Mercer, the chief executive of Georgia Credit Union Affiliates, a trade association for credit unions.
Using data from Bankrate.com and FindABetterBank.com, the AJC estimated annual costs for the accounts based on monthly fees and overdraft fees, assuming customers had three overdrafts in a year and didn’t have sufficient funds to avoid the monthly fees.
The cheapest option, Capital One 360, which generally costs nothing, is an Internet-only account that pays bills electronically and charges a small daily interest rate for overdrafts rather than a fee.
Also near the top of the list are a handful of prepaid debit card accounts, including Bluebird, a product that Wal-Mart rolled out two years ago in partnership with American Express. Those accounts don’t charge overdraft fees because they don’t allow customers to spend more than they have in their account.
GoBank is similar because once a customer spends more than he has in his account, he’s not allowed to make any more payments until he deposits more money. The GoBank account is estimated to cost $107 annually, unless customers deposit more than $500 to avoid monthly fees.
Several local credit unions and banks also have cheaper accounts, even when they charge overdraft fees, because they don’t charge monthly fees. They include Delta Community Credit Union, Georgia’s Own Credit Union and Associated Credit Union, each with an estimated $90 annual cost.
But whether it’s offering the cheapest option or not, Wal-Mart could make a big splash by drawing in the so-called “unbanked” with a combination of easy terms, and convenient hours and locations.
Georgia has a higher percentage of households than the nation as a whole — 11.5 percent vs. 8.2 percent — who don’t use banks, according to the Federal Deposit Insurance Corp. Those folks, who often can’t get a checking account because of weak credit, end up paying more for day-to-day bill payments and borrowing by having to rely on money orders, payday lenders and other costly alternatives.
Wal-Mart said almost anyone over 18 who passes an identification check will be able to open a GoBank account, and customers will be able to do their banking business on their phones, computers or at Wal-Mart stores.
“There are segments of the population that would probably be very attracted to that,” said Genie Driskill, with Synergistics Research, a financial market research firm. “Wal-Mart’s making an all-out effort to get the checking relationship.”
The nation’s largest retailer, which has been trying to get into banking for years, is making this latest jump into the business at a time when the nitty-gritty business of paying for stuff is in more flux than usual.
A federal consumer watchdog is expected to soon begin investigating banks’ costly overdraft fees, which often top $35.
Meanwhile, to head off growing piracy of credit card numbers by hackers, credit card companies are pushing merchants to adopt more sophisticated cards next year that include a harder-to-duplicate microchip. And Apple is trying to upend traditional debit and credit card transactions with its latest iPhone, which allows consumers to instead use their phones to send encrypted payments to the cashier.