Walmart Targets The Poor With New Checking Accounts

Walmart Targets The Poor With New Checking Accounts

The Huffington Post | By Jillian Berman | Posted: 09/25/2014 1:59 pm EDT
Excerpts:

"By offering low-fee checking accounts, Walmart dares to go where most big banks won't. Few major financial institutions are willing to give lower-income Americans checking accounts these days - without exorbitant fees.

But, unlike the big banks, Walmart really needs low-income customers.

The retail goliath on Wednesday announced it would offer customers checking accounts with no minimum balance and no fees for overdrafts or bounced checks. Those who get a direct deposit of at least $500 every month -- a floor that includes many people receiving government benefits -- will have the $8.95 monthly fee waived.

The decision to introduce the checking account, which will be available by the end of October, came after hearing from customers that "traditional banking fees are just too high,: said Molly Blakeman, a Walmart spokeswoman. "We think that our customers have a need there and we're looking to help them fill that."

Walmart's core customers -- low-income Americans -- have been squeezed by government benefit cuts, high unemployment and stagnant wages.

The new checking account may offer some relief by cutting the cost of financial services, like paying bills and cashing checks. That also could free up money for people to spend at Walmart.

Walmart needs that money. Sales at U.S. stores open a year, an important retail metric, have been flat or negative for six straight quarters. Food stamp cuts in November hurt the company's bottom line, executives said.

Walmart has been pushing for several years to get into financial services. The company offers check-cashing, bill-pay and a prepaid debit card. The retail giant also houses independent bank branches in some of its stores.

In the mid-2000s, Walmart tried to get a federal bank charter so it could take deposits, a move widely opposed by the banking industry at the time. This new effort differs in that the services are provided through Green Dot Bank, but exclusively available at Walmart. To open an account, customers must buy a $2.95 starter kit from a Walmart store.

In recent years, traditional banks have shied away from lower-income people without traditional bank accounts -- "the unbanked and underbanked," who make up nearly 10 million and 24 million households in the U.S. respectively, according to the Federal Deposit Insurance Corp. Because banks can't make much money off accounts with low balances, "they're trying to repel these accounts with high fees," said Mehrsa Baradaran, a professor at the University of Georgia's School of Law who studies the unbanked.

That Walmart is one of the few options available to poor customers looking for a cheap bank account is troubling, given the retailer's profit motive, said Wallace Turbeville, a senior fellow at Demos, a progressive think tank. Unlike the Post Office, which some have considered as an option for low-fee checking, there's no reason for Walmart and its partner bank not to take advantage of customers who have so little bargaining power, he said.

"There's a huge number of people that are underserved or overcharged for financial services,” Turbeville said. "That suggests that its going to be profitable for Walmart."”

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IMO: So Walmart "associates" are going to be bankers now? Do they get paid a better salary for that additional non-wage-paid work? Will they be compelled to give up their break time to fill in for the real banker that needs his break? Does this whole new enterprise conflict with the employees' wage scales, and what profit does Walmart expect to get from this invasion into the banking field?

With the Walmart owners right up there with the 1%ers in extreme wealthy in the Walton Family, why are Walmart employees still collecting compensation from the government for medical and living costs, when the Waltons' profits have soared for decades making them within the 1% of the richest corporations in the U. S.

Now is the time for banks to stop favoring customers that have huge bank accounts and lower their fees to become competitive with Walmart in order to keep the customers they now have and to keep them in the future.

What other corporations have done in moving their companies overseas for cheap labor and bigger profits, Walmart CEO's have succeeded in getting the same profits for Walmart without moving their companies overseas, getting all the expenses of their employees paid by our government thru funds from taxpayers...which means we are paying the expenses for the Waltons to be one of the richest corporations in America.

 

Well I have stock in Bank of America and that won't help my stock any, but it's a good deal for the poor and it might be for Walmart, as it will bring more people into their stores to shop.

Don't look for check out clerks to also be bankers though.

Walmart will have to be careful though if they don't charge for bounced checks. That could come back to hurt them.

 

Good for WalMart.

 

I've made my views on the wealth gap pretty clear a couple of times already, so you know walmart isn't one of my favorite companies.

That being said, it really looks like this is a move I can get behind. It could be really helpful to lower income people and it isn't going to make walmart a bunch of money directly although I bet they're counting on more customer spending in the stores because of it. I have no problem with that. Offering incentives to customers is the way it's supposed to work.

 

If welfare or social programs are cut Wal Marts stock would be in the toilet.

 

If commercial banks do not encourage low deposit checking accounts, then great for Walmart to fill this void.

It will be interesting to see how long it takes for middle-income earners to transfer to Walmart? Once Walmart's banking system is in place, they will provide incentives for higher earners to be involved. People I know are pissed when they order new checks and must pay $30 so Walmart has some room to incentivize higher earners with free checks, higher interest rates on deposits, etc.

Also, there is risk involved in banking so this move is not necessarily a cake-walk...

 

My 21 yr old helper has already got himself deep into Walmart debt. Has the new Walmart credit card and has overextended himself in about three weeks.

 

Banking is for rich people I use my government ACCESS card for my SSI, since I can't save much anyway or lose my benefits its a decent option.

 

Walmart sells groceries at half the price of Safeway and Raley's. Only the wealthy can go to those places to shop. I shop at Walmart, and thank God for them.

 

That's right. IF I had a Pot store in CO I would want to open a Donut store next door.

 

Oh, no, the self-styled elites go to the really yuppie stores with all organic food. They wouldn't think of shopping in WalMart, Safeway, or Raley's.

Dollface, if welfare gets cut the Democrats will be out of business long before WalMart is.

 

If Obama offered this the liberals would be gushing all over him.

 

Yeh, they like those trendy places.

Err... ..by the way, I'm a guy Patrick, not a girl. Dollface ain't working for me. No harm no foul though, just an FYI.

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LOL! That's so true.

 

Walmart has about 1.5 million employees. How many jobs have you created?

 

Wal-Mart, and I'm sure many, many other stores, run the check electronically to make sure the funds are there, and then hand you back your voided check. I'm guessing these low income accounts don't have overdraft protection.

 

Damn that's a good Idea!

 

I don't see any downside to this story. In fact, since you have to have a SS# to open a checking account... we should contract Walmart to issue Voter ID cards at their banks.

Win-Win!

 

Liberals love to hate on Walmart yet they often do not even know why. It is just one of the daily talking points beamed into their skull from the man behind the curtain.

The fact is that Walmart usually pays above minimum wage, and above industry standards, they offer healthcare which may not be the best but it is at least something, they cut prescriptions to 4 dollars for many common medicines to help the poor and are now doing this.

They have a great record and you would think the liberals would be fully behind them but since they are a corporation the liberals have to hate on them.

Even their new/old messiah, Hillary worked for Walmart so go figure.

 

With the exception of Agent and one guy in the article, it appears they do approve of this move, judging from the thread comments at least.

 

More fake outrage....

 

I thought the article had a pretty neutral tone, no?

 

Well, why not, Agent? Democrat's have been targeting (via bribe's with tax payer $$$) the poor for votes for as long as can remember.....and guess what...we still have a boatload of poor people while the elite Dem's in DC, the DNC & unions are still raking in the big bucks. Geesh, at least Walmart has cheap food to offer...

 

No, they'll just vacuum up all that ready cash from depositors who give their paychecks to Wal Mart.

In effect, Wal Mart becomes a global "company store".

Wall Street should be a lot more worried about that than Main Street.

At least for the time being.

 

Oh, it will be a great deal for Wal Mart.

If Wal Mart can vaccum up the very sort of middle class payroll deposit cash that built the Bank of America in the first place, the big banks need to worry.

You may want to short your stock at some point.

Because if Wal Mart is the place where Billy Bob deposits his paycheck, neither Billy Bob or Wal Mart will need the Bank of America.

 

Not seeing any outrage, are you?