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Concern tonight over what some are calling a growing threat to the banking industry and I'm talking about prepaid debit cards.
Just this week American Express some Wal-Mart launched their own card that they're calling the bluebird.
My next -- is one of the cards critics saying it threatens traditional banking Neil Weinberg joins me now he's the editor in chief.
Of American banker -- it's always great to have you here Howard these cards a threat to banks.
Well they're a threat to banks because Amex and Wal-Mart obviously Wal-Mart with 4000 retail stores are trying to competing get away a lot of the checking account customers.
If this card works -- promised to be able to do direct deposit you'll be able to send money to pay bills to be able to send money to other people.
You'll be able to take a picture of a check and deposited on the prepaid.
Account so it's got a lot of features that there might try to compete with the standard bank account.
I wanna show folks that you know we have complained about these cards.
Forever and generally we complain about the celebrity cards like Suzie -- -- they deserve it.
I thank you for that.
But -- the fees associated with this -- the bluebird actually looks pretty good can -- to a lot of them.
There is no monthly fee for the bluebird card the green dot card has a five dollar and 95 cents.
Monthly fee -- Wal-Mart money card has a three dollar fee.
Of course there are other -- can -- -- by the way we're gonna put this on our website see you can really drill down to this at this as your topic.
But why should viewers at home be concerned and and just going to the idea who might get these -- who buys these prepaid cards.
Well the prepaid card business interestingly -- started out.
Targeted at affluent young kids whose parents wanted to give -- some but it actually caught on.
With people who couldn't get bank accounts or didn't want to get bank accounts and it has sort of this low brow.
Image but now and also because people were so mad at banks that they wanted other option have -- wanted to get the heck away from these folks who were raising fees it every track absolutely and now what you're seeing is a lot of people middle class people are kinda angry at their banks so they just don't wanna pay the fees which for checking account now range anywhere depending on whose numbers you use for about sixty dollars 250 dollars a year.
Just in service fees and of course you have overdraft fees and all of these other things with a prepaid card.
You won't have that and the fees to the -- are actually.
Virtually nothing as you.
As you said Jerry and let's -- get the celebrity -- we -- -- that in that case you're paying capitalize it.
Let's have a little bit about all the money flowing into this industry customers loaded 82 billion dollars.
-- these cards they're voting with their feet do you see any downside to this for consumers to.
Down the road might want to take out a mortgage or they might wanna get -- college -- credit.
-- the downside to these cards is the fact that you don't have a relationship with the bank so if you go in and you wanna take out alone obviously they don't have that same history.
It will not help your credit score if you have a bike it would with a bank account if you had a checking account and you -- Obviously not over drawing it.
So there are there is that downside and of course it's it's not money you that you're saving its money that you're just putting on a card.
So you can spend it.
Yeah there's there's really no benefit to it.
And one of the fact that really -- took my breath awaited day is that this business is growing twice as fast as credit and debit cards.
It seems to me at some point bankers are gonna have to wake up and realize hey you need regular retail consumers or is our business just.
Still expensive for them so lacking in profits that they're eager to walk away.
Well unfortunately for the banks it costs about 250 to 350 dollars a year to keep checking account open so unless you do other forms of business with them or you have a big balance.
-- they are gonna come -- and say -- but for these low balance customers they -- too sad to see them go away and the banks of course are also coming out with their own.
Prepaid cards -- JPMorgan Chase and a lot of the other big banks.
Have come out with these cards so they see the writing on the wall well but we'll continue to report on -- -- and tell you better ways to play with your -- that's for sure.
You're one of the smartest people on this topic thanks for coming on and I --
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