American Express is offering a new checking account and debit card alternative with Walmart called Bluebird. A key benefit of it is that it will never overdraft.
Add Cash at Walmart
Adding cash to the Bluebird account at Walmart is free. This can be a good way to deposit cash. Walmart is open in evenings and on weekends. You don’t have to go by the bank hours. It’s a good feature for someone who’s paid cash for what they do.
Free ATM Withdrawals
Bluebird gives free ATM withdrawals from ATMs in the MoneyPass network if the user has direct deposit, which can be done by a scheduled recurring monthly transfer from a bank account. This can be useful when you are traveling outside your own bank’s territory but you can find a Walmart or MoneyPass ATM nearby.
Mobile Phone Check Deposit
With Bluebird you can deposit a check by taking a picture of it with a smartphone. If your own bank doesn’t offer mobile check deposit, you can deposit the check to Bluebird before withdrawing to your bank account.
Bluebird card supports free bill payment just like online banking in a regular checking account except it doesn’t support scheduling recurring payments.
Transfer To and From a Bank Account
The link between the Bluebird account and a regular checking account is both ways and free. If you are using Bluebird for budgeting, this allows you to add money from your bank to Bluebird or transfer from Bluebird to your bank account easily.
Sub-Accounts and Transfers
You can have sub-accounts and transfer between them and the main account. You can also transfer money from one Bluebird account to another person’s Bluebird account. Good features for managing accounts set up for kids and other family members.
Replace Checking Account?
The Bluebird account is marketed as replacement for checking accounts. It has pretty much all the features you want for managing your money. What doesn’t the Bluebird card do that a regular checking account does?
(1) ACH debit. Some utilities and especially mortgage companies don’t accept cards but they will do auto-debit. Bluebird does not allow ACH debits. The alternative is to use bill payment from the Bluebird account.
(2) Use at places that don’t take American Express. Use a different card or cash at those places.
(3) Pay interest. Insignificant these days. Many bank accounts just pay 0.01% if that.
The Bluebird account already blocks overdrafts on the card side. When you write a pre-approved check, money is already set aside. ACH debit is the remaining source of overdraft. Not allowing ACH debit blocks that as well. As long as one can use bill payment, not having ACH debit may be actually desirable because you will never overdraft.
The feature-rich Bluebird account is indeed a good alternative to a checking account. For most things people do with a checking account, Bluebird can do the same, in many ways even better. Not possible to overdraft and no fees make it the best product for those who suffer from overdraft fees.
I read a report saying bank customers created average 7.4 overdrafts per account in 2011. When you take out a large percentage of customers who had zero overdraft, the average on the remaining accounts that had at least one overdraft must be much higher. In a perverse setup, those who don’t have money are footing the bill for free banking services for those who have money. For customers being dinged for overdrafts left and right, switching to Bluebird would be a no-brainer.
If Bluebird and whatever come out to compete with it are really successful in getting a large number of customers who currently supply overdraft revenue to the banks, banks will really have to charge the true cost of banking to customers who aren’t paying today. I’d rather pay the true cost than riding on the backs of those who have less.
For those with a good checking account already, the Bluebird account can be a substitute or backup ATM card, a convenient cash and check deposit conduit, a deposit-only bank account you can confidently give to others paying you, or an allowance tool for kids or elderly parents. There must be some other good ways to use it I haven’t thought of.
If you want a Bluebird account, just sign up online. They will send you a card in the mail. You add money to it after receiving the card. If you buy the “starter” card at Walmart, it will cost you $5 (not credited in the account).
[Photo credit: Flickr user PetraZone]
Say No To Management Fees
If an advisor is charging you a percentage of your assets, you are paying 5-10x too much. Learn how to find an independent advisor, pay for advice, and only the advice: Find Advice-Only.