Fri Sep 26 2014
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Welcome to Bank of Wal-Mart

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“Attention, Wal-Mart shoppers! Just go ahead and leave all your money here, all the time. We’ll make sure it has a good home.“

That’s what the nation’s largest retailer is really saying with its latest venture. Wal-Mart (WMT) is launching GoBank, a nearly free checking account aimed at millions of “unbanked“ Americans.

Surprisingly, Wal-Mart’s GoBank may be a good deal even if you’re already “banked.“ Let’s take a closer look.

***

Wal-Mart has tried to enter the banking business before. They actually applied for a bank charter back in 2007. The traditional banks threw a fit and Wal-Mart dropped the plan.

Many Wal-Mart stores have bank branches inside, but these are non-affiliated institutions to which Wal-Mart simply counter space. They have nothing to do with the new GoBank product.

GoBank is actually a joint venture between Wal-Mart and Green Dot Corporation (GDOT). To open an account, Wal-Mart shoppers will buy a $ 2.95 starter kit with a temporary debit card and then complete the process online.

Full details are in Wal-Mart’s press release. Here is how it begins.

Sept. 24, 2014 — Pasadena, Calif.

Green Dot Corp. (NYSE: GDOT) and Walmart (NYSE: WMT) today announced the nationwide rollout of GoBank, a checking account product available exclusively on the retailer’s shelves. The checking account, from Green Dot Bank, Member FDIC, is designed for today‘s “on-the-go“ customer, providing a host of modern features and a linked MasterCard debit card. GoBank doesn’t charge overdraft fees, minimum balance fees or monthly fees with qualifying direct deposits. The product will be available nationwide by the end of October.

“Many so-called ‘free’ checking accounts aren’t really free because they have high overdraft fees. In fact, an independent study by Bretton Woods estimates that consumers pay approximately $ 218 — $ 314 per year for a basic checking account,“ said Steve Streit, founder and CEO of Green Dot Corporation and chairman of Green Dot Bank. “No other checking account makes it this easy and affordable to manage your everyday finances. GoBank is breaking down the barriers to traditional banking and brings the benefits of a FDIC-insured checking account that’s loaded with features to a large segment of Americans.“

GoBank, a full-featured checking account, is offered as part of Walmart’s checking alternatives category.

“Walmart customers want easier ways to manage their everyday finances and increasingly feel they just aren’t getting value from traditional banking because of high fees,“ said Daniel Eckert, senior vice president of services for Walmart U.S. “Adding the GoBank checking account to our shelves means our customers will have exclusive access to one of the most affordable, inclusive and easy-to-use checking accounts in the industry. GoBank gives our customers yet another option as to how they manage their money. When our customers have options, they win.“

I like that last line from the Wal-Mart executive. “When our customers have options, they win.“ He is exactly right. When it comes to banking, too many people don’t have options.

Most banks routinely run credit checks on anyone applying for a checking account. As we all know, the last recession hit many Americans very hard and left them with damaged credit ratings. Millions of low-income people don’t have a credit score at all, because they’ve never been able to borrow money.

The banking industry has effectively “locked out“ these folks. They end up using cash for everything, which puts them at risk of being crime victims or have to pay fees for money orders and paycheck-cashing services.

GoBank won’t run credit checks and will accept almost any adult with valid ID. User will pay an $ 8.95 monthly service charge, which they will waive if you have a direct deposit of $ 500 or more during the month, and no overdraft fees. Meaning, it is effectively free to anyone with Social Security or another regular paycheck.

***

Why is Wal-Mart doing this? I don’t think it is complicated. They want people to spend more money in their stores. Notice what they said in the press release. Consumers pay an average $ 218-$ 314 per year on checking account fees. I’m sure it is much higher for people who use check-cashing services.

Much of this money goes for overdraft fees, which of course you don’t face unless you overdraw your account. Many people seem to have trouble with that.

In any case, multiply $ 218 by about 30 million unbanked Americans. You get $ 6.54 billion a year that Wal-Mart shoppers aren’t spending at Wal-Mart.

There’s a reason Wal-Mart is so huge. Their regular customers aren’t millionaires for the most part, but they spend plenty of money on food and other necessities, plus whatever luxuries they can afford.

Wal-Mart wants to keep as much spending as possible within its own walls. GoBank will help them do it.

And, if you’re a retired American on Social Security, GoBank may well be a lower-cost option than your current bank. You should certainly check it out.

***

I have a follow-up for you on that mysterious oil tanker, the United Leadership. I reported on June 13that it was on the run with Iraqi oil Kurdish forces had seized.

With the U.S. and other nations blocking attempts to sell its cargo, the ship dropped anchor off the coast of Morocco and stayed there — until last night.

Shipping tracker MarineTraffic.com says the United Leadership passed through the strait of Gibraltar last night. The ship is now steaming east in the Mediterranean with supposedly Greece as its listed destination.

Why is this ship suddenly moving after three months? I don’t know, but we know that a U.S.-led coalition just started bombing Syria on behalf of Iraq and Kurdistan. Maybe there is a connection.

I can only find one recent news story on the United Leadership and it is in French. Reading via Google Translate, I think it says the Kurds have given up trying to sell the oil and the ship is now going to Cyprus.

Can any native French speakers look at the article and then send me an e-mail to verify this?Merci beaucoup!

***

Stocks started out weak this morning and got no better as the day wore on. What happened?

  • If you want to blame somebody, consider Vladimir Putin. A member of his party introduced a bill in the Russian parliament to permit government seizure of foreign assets.
  • Positive economic data didn’t help. The economy may be strong enough for the Fed to raise rates sooner than traders were expecting. That’s right; good (economic) news really is bad news for stocks.
  • Apple (AAPL) was another trouble spot. It seems the iPhone 6 Plus is bending in some people’s pockets. Plus, the company tried to push out a software update that disabled the “Phone“ part of many iPhones. AAPL dropped 3.8% to $ 97.87 by the close.
  • U.S. Attorney General Eric Holder reportedly plans to resign from office, but says he will stay on until the Senate confirms a successor.
  • Who will it be? No one knows, but getting him or her through the Senate may be a tall order, depending how the November election goes.
  • Gold and crude oil were relatively stable today, with gold slightly higher and oil down a bit. That suggests the worries are specific to equities and not the start of a wider panic. We’ll see how tomorrow goes.

Good luck and happy investing,

Brad Hoppmann
Publisher
Uncommon Wisdom Daily

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