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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 rando

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...

henryfjordan 10y ago
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?
- oconnore 10y ago
  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.
  - SamReidHughes 10y ago
    They're benefiting because before they were not saving in the first place.
  - twblalock 10y ago
    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.
    - flukus 10y ago
      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.
      - protomyth 10y ago
        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.
        flukus 10y ago
        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.
        rdl 10y ago
        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.
        protomyth 10y ago
        https://mobile.nytimes.com/blogs/dealbook/2013/07/30/over-a-million-are-denied-bank-accounts-for-past-errors/ https://mobile.nytimes.com/blogs/dealbook/2013/07/30/over-a-...
      - sigstoat 10y ago
        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.
        flukus 10y ago
        > 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.
  - protomyth 10y ago
    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.
    - morgante 10y ago
      > 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).
      - rdl 10y ago
        I'm sure they pull chexsystems.
        morgante 10y ago
        ChexSystems is different than a credit report. They can clear you even if you don't have any credit or have bad credit.
      - protomyth 10y ago
        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.
- gumby 10y ago
  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.
  - Spooky23 10y ago
    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.
jmvoodoo 10y ago
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.
- qntty 10y ago
  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.
  - twblalock 10y ago
    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.
  - LyndsySimon 10y ago
    > 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.
  - Spooky23 10y ago
    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%.
    - Aloha 10y ago
      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.

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...

henryfjordan 10y ago

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?

oconnore 10y ago
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.
- SamReidHughes 10y ago
  They're benefiting because before they were not saving in the first place.
- twblalock 10y ago
  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.
  - flukus 10y ago
    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.
    - protomyth 10y ago
      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.
      - flukus 10y ago
        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.
        rdl 10y ago
        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.
        protomyth 10y ago
        https://mobile.nytimes.com/blogs/dealbook/2013/07/30/over-a-million-are-denied-bank-accounts-for-past-errors/ https://mobile.nytimes.com/blogs/dealbook/2013/07/30/over-a-...
    - sigstoat 10y ago
      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.
      - flukus 10y ago
        > 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.
- protomyth 10y ago
  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.
  - morgante 10y ago
    > 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).
    - rdl 10y ago
      I'm sure they pull chexsystems.
      - morgante 10y ago
        ChexSystems is different than a credit report. They can clear you even if you don't have any credit or have bad credit.
    - protomyth 10y ago
      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.
gumby 10y ago
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.
- Spooky23 10y ago
  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.

jmvoodoo 10y ago

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.

qntty 10y ago
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.
- twblalock 10y ago
  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.
- LyndsySimon 10y ago
  > 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.
- Spooky23 10y ago
  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%.
  - Aloha 10y ago
    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.