High Risk from Bluebird, the latest Banking Attempt of Wal-Mart and American Express

Be aware of terms in Prepaid Store Cards or the Bluebird  Card.

Without digging beneath the surface, the Bluebird account looks attractive to people needing banking services.  Looking deeper probably changes that opinion.  At Lincoln Savings Bank, we want to make sure our customers have the facts. 

Bluebird is a prepaid debit card account created by Wal-Mart in conjunction with American Express.  “Deposits” held with Wal-Mart/American Express’ are not “bank accounts”.  They are essentially prepaid debit cards.  They are not insured or guaranteed nor are they regulated for the protection of the consumer as banks and bank accounts, leaving you with less protection and less peace of mind. 

 A major factor to consider is that there is little government regulation for prepaid cards such as the Bluebird card.  At traditional financial institutions like Lincoln Savings Bank, bank accounts are insured up to $250,000 for the most common accounts, are regulated, get audited and reviewed as a normal course of business, all to keep banks on the straight and narrow and keep customer’s accounts safe.  With a prepaid card such as the Bluebird card, customers are relying completely on Wal-Mart and American Express to do the right thing.

The Bluebird card also touts having no minimum balance requirements or fees.  However, there are some hidden fees, like a $2 fee for getting money back out of this account.  Since prepaid cards such as the Bluebird card are not regulated like a bank account, underlying fees and rules can be changed by the issuer fairly easily.  As a result, the rules of today might be different tomorrow. Most prepaid cards such as this impose a non-use fee which serves to eventually deplete the funds of the card if it has not been used in a set period of time.

You may also find it interesting that Wal-Mart attempted to create a federal bank charter for deposits in 2007 and failed to get approval because they did not meet requirements.  So the Bluebird card is their alternative to a failed attempt at expanding into banking.

Finally, we want you to remember that Lincoln Savings Bank is the #1 community bank in the Cedar Valley and our employees are also our owners. We support the community, employ members of the community, pay local taxes and lend money to support the local economy.  When you bank with us, you know you are not only being serviced by trusted, government regulated members of the community, but you are also helping the local economy.  Stop in or check out our website to learn about our many services and banking account options – we have one that is right for you.

Article Sources:

Bluebird Member Agreement. (2012, October). Retrieved from https://bluebird.com/legal/#member-agreement

No FDIC Coverage for Bluebird from Amex, Walmart. (2012, October 9). Retrieved from http://www.cutimes.com/2012/10/09/no-fdic-coverage-for-bluebird-from-amex-walmart

Walmart’s Bluebird Card: Has Checking Met Its Match?. (2012, November 5). Retrieved from http://www.thestreet.com/story/11756287/1/walmarts-bluebird-card-has-checking-met-its-match.html

Wal-Mart wants to become your new bank. (2012, October). Retrieved from http://www.nbcnews.com/business/wal-mart-wants-become-your-new-bank-1C6468338