I updated this article I wrote a year ago. Everything worked as I described here. The same program is still being offered.
If you liked Mango Prepaid card with its 6% savings account (3.9% after taking into account idle cash) but you wished you could put in more than $5,000, here’s another one that does pretty much the same thing.
Like Mango, you open the savings account after you get the prepaid card. The savings account pays 5.1% APY for balance up to $5,000. Balance over $5,000 earns 0.1%. You must have recurring deposit into the card in order to keep the 5.1% rate on the savings account. I’m not clear how much in recurring deposit is needed but $50/month will probably do, as in Mango.
Although the rate on the savings account is lower than Mango’s (5.1% APY vs 6% APY), the monthly fee is also lower: only $2/month vs $5/month on Mango. Unions’ collective bargaining power might have something to do with it? You can either pay the $2 monthly fee or bump your monthly ACH transfer to $500/month to have the fee waived. At only $2 a month, you may decide to just keep the monthly transfers at $50 and pay the fee.
Taking into account the initial $5,000, the monthly $50, and the $2 monthly fee, the effective net yield comes out to 3.8% on an average balance of $5,300.
Same as what you do with Mango, if it bothers you that your monthly recurring deposits plus interest earned pile up there earning nothing, you can withdraw them. You don’t have to withdraw more frequently than once a year.
Earning 3.8% sure beats earning less than 1%. If you are married you can get one card for each person and double the amount on which you earn 3.8% to $10k. Although it’s marketed through labor unions, you don’t have to submit any proof of union membership.
Adding up both Mango and Union Plus prepaid cards, a married couple can have $25k earning close to 4% FDIC insured. They make more than twice as much as I Bonds paying less than 1.5% at this time.
[Photo Credit: Flickr user aflcio]