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Comment by egypturnash | Hacker News Reader

I'm just gonna bet that the amount of money Walmart makes in interest on those "vaults" is a lot more than the few thousand bucks they dole out monthly to random users...

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So? The people targeted for this card are those who otherwise aren't saving anything. The same people would be subject to larger fees at a bank and get sub-1% rates on a savings account. They benefit from this program. Why should Walmart not see that hole in the market and exploit it? Isn't that what this community is all about?

Yeah, I doubt it's much of a money maker for WM, even at WM's scale, as the transactions are so tiny. The bigger win is presumably that their customers might have some money to spend later on.

It's really just layaway without tying up a product. The customer benefits because the cash is safe. Walmart benefits from the goodwill and high probability of the money being spent with them.

Capital One 360 pays 0.20/0.75 APY (checking/savings respectively) with no fees or minimums (I'm sure others do too, I just happen to be a customer ^).

So... they are not benefiting. They are losing out on interest and a real bank account, and Walmart is seducing them to stay with a lottery.

Capital One 360 is for people with better credit than the folks in the article have. If you have means then you get better investments. Heck, a lot of the people in the article are rejected just trying to open a bank account.

AmEx allow direct deposit to their Bluebird card which is another Walmart card.

> Capital One 360 is for people with better credit than the folks in the article have.

They don't pull your credit to open an account, so I don't see how that's true. I've had one since I was 18 (and had no credit history to speak of).

No credit is different than bad credit. They do claim they stopped using Chexsystems as an additional check but they still check credit.

A lot of financial institutions like to offer products to 18 year olds. Ask about credit cards issued to college students.

I'm sure they pull chexsystems.

ChexSystems is different than a credit report. They can clear you even if you don't have any credit or have bad credit.

The article mentions that many people are unbanked because they fear overdraft fees, or have had to pay them before. This is a well known problem, and it drives people to use check cashing stores and debit cards like the one WalMart offers instead of banks.

They can't get debit cards from a bank? Even my mastercard is tied to a debit account.

Edit - from the comments below it sounds like the issue is caused by a fucked up banking system more than anything.

They cannot get a bank account to get a debit card. Banks and a lot of credit unions have become problematic for low income folks.

Why is it hard to get a bank account? There is no risk to the bank from a low income person having an account, worst case for them is it's empty.

There is risk to the bank for bad-credit people having an account.

1) CSR interactions cost them way more than they'll ever make from the account, if the person stays poor forever

2) A lot of banking actions are not proper "transactions" or atomic in the CS sense -- you can end up overdrawing an account pretty easily. A genuinely poor person is eventually going to get charged off on this.

A lot of poor people fail chexsystems (bank account credit check, basically) from bounced checks, and thus can't open accounts. Which then limits their access to the banking system, including receiving funds, forcing them to use more expensive alternatives.

https://mobile.nytimes.com/blogs/dealbook/2013/07/30/over-a-...

you can overdraft debit cards, and of the college students i've known over the years, that's the most common thing to overdraft.

and then find out about your overdraft (and the 17 following it) a week later when you get a letter in the mail.

> you can overdraft debit cards

Not always, my debit cards have always had the overdraft facility turned off. If there's no money in the account then the transaction doesn't go through.

It's possible to overdraft a debit card even if overdraft is not enabled on the account, due to how some merchants process some transactions.

That's a cost that should be worn by the merchant, if they aren't going to check that money is available in the account then that's their problem.

Is their anywhere else in the western world that has these problems? Or even the developing world?

The biggest places you used to see this were gas stations, they'd put a $10 hold on your account and then post the transaction for whatever you actually purchased - this two-phase process also exists at restaurants for tips.

The gas station issue has been mostly solved, debit networks now allow you to query the available balance on the linked account - I've been embarrassed once a few years ago when the pump only allowed me to put a couple dollars worth of gas in the tank because I had overdraft protection turned off (not an issue these days, I'm in much better financial health).

The issue with restaurants will eventually be solved when they are forced to switch to EMV and require you to put the tip in before the card is run, not writing it on the receipt. But who knows when they'll be forced to, the liability shift obviously hasn't bothered them much.

Unsure why this is so downvoted? Several banks support turning off the overdraft feature, which just causes debit transactions to be declined (or ACH items returned).

What about NSF fees? The NSF fee at my bank is 8x more than the overdraft fee ($40 vs $5 + 20% APR). Turning overdraft off would be a poor choice for me even if I anticipated the occasional overdraft.

The problem is that those features don't always work if multiple pending transactions have been submitted, or if checks are used, transactions ordered a certain way (some banks have been in trouble for doing this in the past), etc.

They're benefiting because before they were not saving in the first place.

That's how a win-win works. If Wal-Mart can make a profit by getting people to save money there's nothing wrong with that. Especially when compared to the banks that make significant money fining you for being broke.

Except that by giving walmart money that could be invested conservatively, you've actually losing money to inflation. True, this is exactly what most people do with their banks, but banks aren't win-win either, they're both businesses that offer these services because it makes them money.

How do you expect the factory worker to start investing her <$500 savings?

Interest is a waste of time anyway these days. My credit union is paying 0.10% on savings accounts under $100k, and something like 0.25% over that amount. A "high yield" online only account might pay as high as 1%.

this is probably the most valuable comment here.

Often the poor are poor because of a lack of financial literacy. I've seen it in those around me, and in my own parents. Getting people to save money for a rainy day is powerful. I've started doing microloans to help lift my friends up too, I made it.. and with a little help, maybe I can lift them up with me.

The people who use the WalMart debit cards are not the kind of people who invest money, or even normally save it. They are poor people who often have zero cash savings, and now they have some.

> Except that by giving walmart money that could be invested conservatively

This isn't money that could be invested conservatively - this is money that might be needed tomorrow, or next week, or next month.

Your first $1000 should be considered an emergency fund much more than an investment. Everyone should have or work towards having $1000 to their name, but way too many are living paycheck to paycheck and saving literally nothing.

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