MADISON, Wis. (10/7/14)--Wal-Mart's freshly unveiled digital bank account was supposed to send shockwaves throughout the financial services industry, but compared with credit unions, how competitive is it?
Called GoBank, the product allows consumers to make purchases with a debit card or with a smartphone. There are no overdraft fees or minimum balance restrictions because, if the consumer doesn't have the cash, the card doesn't let them make the purchase.
But unless customers make monthly direct deposits of $500, the account costs its users $8.95 per month.
Credit unions nationwide can beat that.
In Atlanta, Wal-Mart's product ranked below more than a dozen accounts offered by local credit unions and banks, according to the Atlanta Journal-Constitution.
"They're probably going to find a cheaper option, provided they don't overdraft the account," Mike Mercer, president/CEO of the Georgia Credit Union Affiliates, told the Atlanta Journal-Constitution (Oct. 3).
Further, even if overdraft penalties are charged, credit unions still come out on top because they typically carry no or low monthly fees.
Wal-Mart's GoBank account costs an estimated $107 annually, according to the Atlanta Journal-Constitution.
Wal-Mart also will charge its users $2.50 every time they use an out-of-network ATM, in addition to a 3% foreign-transaction fee. Additionally, customers will have to pay $2.95 for a starter kit from the mega-retailer, and make a $20 minimum deposit when first opening the account.
Meanwhile, if consumers can stave off overdrafting their accounts, they should look at becoming members at credit unions, which continue to lead the financial services industry in free checking accounts.
About 79.6% of credit unions offer free checking, compared with only 47.9% of banks, according to a study by Moebs $ervices from earlier this year (News Now Sept. 17).
Several other online publications have listed credit unions as better alternatives to Wal-Mart's product as well, including Yahoo! Finance, which said that for the best low-fee offerings available, look to a credit union or small bank.
"You'll get the benefit of having a physical branch to visit when you want and the added bonus of low- or no-fee checking accounts," wrote Yahoo!'s Mandi Woodruff (Sept. 29).