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Customers Angry at Bank of America-Like Fees Turn to the Small, Local Bank That Is Walmart
November 8, 2011 03:22 PM
IT'S A FEE COUNTRY
We’ve documented how Americans, growing increasingly frustrated at big banks and their fees, have started move away. Last Saturday’s
National Bank Transfer Day
was created specifically to encourage people to migrate over to credit unions and community banks in protest over bank fees.
The event worked -- sort of. While credit unions have seen an incredible uptick in the number of new accounts registered in the last month, there’s also been another surprise beneficiary of consumer rage over big banks -- Walmart.
New York Times
that consumers angry over bank fees, like Bank of America’s now canceled plan to charge a $5 monthly fee for debit card use, have been flocking to Walmart for their banking needs.
Geoffrey Cardone, a 26-year-old factory worker, said he dumped his bank account because he felt that he was being nickeled and dimed by fees. His new payday ritual includes a trip to the Walmart here in northeastern Pennsylvania.
“It’s cheaper,” said Mr. Cardone, who was charged a flat fee of $3 to cash his paycheck. Many check-cashing stores keep a percentage of the check, which tends to be higher.
How cheap is it to bank with Walmart? At more than 1,000 Walmart outlets across the nation that house its Money Centers, customers can cash a check under $300 for a 1% fee, a check between $300 and $1,000 for a flat $3 fee, and checks up to $5,000 for a flat $6 fee. They can also purchase $3 prepaid debit cards that come with a $3 monthly maintenance fee, which is cheaper than debit cards at other retailers that cost $3 and have a $5.95 monthly charge, as the
We don’t know how much Walmart is profiting off its financial service offerings, but the last paragraph on the
story tells us all we need to know about the big box retailer’s strategic goals.
“I cashed my check,” said Barbara Reif, who was with her husband in Dickson City. “And now I’m going to go shopping.”
Ah, right: In these recessionary times, Walmart is shrewdly using its financial services as a loss leader to lure consumers in to spend. What better way to spend your paycheck than on extremely low-priced goods garnered through
aggressive sweetheart deals
The anger customers feel toward bank fees has been tied into the Occupy Wall Street protests, with many considering the National Bank Transfer Day movement as a "sock it to ‘em" lesson for corporate behemoths like Bank of America. In our recently created
Occupy Wall Street Index
, we track the market movement of nine public companies that symbolize the ire the masses have against Wall Street. Bank of America is one of the companies, and, you guessed it, Walmart is another. It's thus somewhat ironic that some customers, having turned away from one too-big-to-fail institution, are now seeking refuge in another
giant. Talk about being caught between a rock and a hard place.
Chances are, though, Bank of America and other big banks like Chase won't suffer much in this customer defection to Walmart. Instead, just like how a Walmart typically outcompetes small, local independent businesses, expect Walmart’s financial services offerings to kill small regional banks and credit unions as their popularity continues to surge.
No positions in stocks mentioned.
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