Wal-Mart and American Express have announced a new prepaid card called Bluebird, which the companies are calling an alternative to debit and checking accounts. The focus is on customers who are fed up with the high fees associated with many checking accounts -- the "unbanked, underbanked or unhappily banked," as Amex's Dan Schulman put it during a conference call Monday.
Both companies stressed Bluebird's versatility and lack of fees.
There's no minimum balance requirement, no monthly or annual fees, and no overdraft fees. If you enroll in direct deposit, there's no fee to get cash from an in-network ATM, and no surcharge for using an out-of-network ATM. Otherwise, it's $2 a pop in-network, and out-of-network surcharges apply. Bluebird will use the MoneyPass ATM network, with more than 22,000 machines around the country.
Other than direct deposit, account holders will be able to deposit money at checkout in any of more than 4,000 Wal-Mart locations, essentially turning the store's cash registers into mini-bank branches. They'll also be able to use Bluebird's smartphone app, which allows users to transmit a picture of a check.
The Bluebird card will be accepted anywhere in the world that takes American Express, and there won't be a foreign transaction fee. American Express also will extend purchase protection, fraud protection and roadside assistance to Bluebird account holders. Bluebird will add paper checks next year.
It's important to note that Bluebird accounts won't be insured by the FDIC. Instead, accounts will be guaranteed by American Express' travel-related services company, which Schulman said is required by law to hold assets to back up 100 percent of Bluebird accounts at all times.
Neither company would disclose financial details of the partnership, but both Wal-Mart and American Express clearly stand to gain. Wal-Mart's Daniel Eckert said Bluebird will add to the "one-stop shop" experience for customers. Amex's Schulman said access to Wal-Mart customers allows the company to expand "outside of our traditional base."
Customers will be able to sign up for free starting next week at bluebird.com, or by using Bluebird's smartphone app. Or, they can purchase an account set-up kit for $5 at Walmart.
HLN Money Expert Clark Howard says Bluebird is a "brilliant" way for Wal-Mart to get into the banking business without opening branches.