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American Express Bluebird: The Best Offer Out There?

by on November 8, 2012

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American Express and Walmart announced today the nationwide launch of the Bluebird prepaid debit card, and it is exactly as momentous as they make it out to be. Whereas traditional prepaid debit cards were characterized by a-la-carte pricing that could easily cost more than a checking account’s monthly fees, the Bluebird offers a way to deposit and access cash without bleeding fees.

How does the Bluebird compare to “old guard” offers?

The Bluebird has a much lighter fee structure than even the more affordable traditional cards:

Card Bluebird Green Dot Card Walmart MoneyCard
In-Store Purchase $5 $4.95 $3
Online Purchase $0
Monthly Fee $0 $5.95* $3*
Cash Reload $0 at Walmart $4.95 with MoneyPak $3 at Walmart
ATM Fee $2.00** $0.00 $0.00
Has ATM network?† Yes – MoneyPass Network

* Waived by loading $1,000+ per month (or, for Green Dot, making 30+ transactions per month)
**Waived with direct deposit
†An ATM network allows the cardholder to avoid surcharges of $2 or more, that are often excluded from cost calculations.

The Bluebird is more affordable than even the new, bank-issued prepaid cards, for those with direct deposit:

Card Bluebird U.S. Bank Convenient Cash Chase Liquid BB&T Money-Account
Activation $5 $3 $0 $0
Monthly Fee $0 $3 $4.95 $5*
Customer Service $0 $2** $0 $2.95***

* Lowered to $3 with $1,000+ load/direct deposit
**First 2 calls per month are free
***$2.95 for in-person call, $0.50 for automated call. First in-person and first automated call per month are free.

Note, however, that the Bluebird is not FDIC-insured: if Amex were to go under, you’d lose your funds.

For dynamic comparisons of the Bluebird and 70 more cards, please visit http://www.nerdwallet.com/prepaid.

Why American Express offers the Bluebird

As NetSpend CEO Dan Henry said in an earnings call, most prepaid cardholders are willing to pay high fees:

I spend a lot of time talking to many of my colleagues in the industry, either be it in the prepaid industry or just in dealings with these low to moderate income consumers…we don’t find a lot of price sensitivity to this product…we have tested free many times…It doesn’t drive incremental volume.

– NetSpend 2Q11 earnings call

But the American Express-Walmart partnership has the possibility to generate revenue beyond simply collecting fees:

  • Cash loads are free at Walmart stores, driving traffic and potentially increasing in-store sales.
  • Walmart provides American Express the opportunity to get in front of a new customer base.
  • American Express earns revenue from interchange fees, assessed on a merchant every time a customer uses plastic.

In the same way that the Chase Liquid, U.S. Bank Conventent Cash and BB&T MoneyAccount cards are able to offer lower fees to attract new customers and draw existing customers away from high-cost checking accounts, American Express and Walmart are able to leverage non-traditional revenue structures to offer a more affordable product.

Dan Henry, CEO of NetSpend: “One of our largest retail distributors today, AGB, charges no reload fee at all. And they do that not, of course, out of the goodness of their heart but based on sound empirical evidence that people go into reload in an AGB spend more than other customers in AGB. And we think it’s inevitable that other like merchants will draw a similar conclusion as they learn more about the product category.” – Netspend 2Q2012 earnings call

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  • Ruth Adorno

    Golden Financial Services has reduced credit card debts with American Express down to 20% of what the balance is.

    • Wendy

      When you add funds to your Bluebird Account, the funds will be placed by us into one or more custodial accounts (“Custodial Account(s)”) we maintain for the benefit of Bluebird Members at one or more FDIC-insured banks (currently Wells Fargo Bank, N.A. and American Express Centurion Bank). These Custodial Accounts will be set up to provide pass-through FDIC insurance. Subject to the limitations set forth below, this means that if a bank holding a Custodial Account fails, you should be insured by the FDIC up to the per-depositor coverage limit then in place (currently $250,000 in most instances). Note that the FDIC insurance maximum applies to all of the funds that you have on deposit with the bank that fails, including funds that you have in deposit accounts with the bank other than your Bluebird-related funds in the Custodial Account
      Check FAQ FDIC is available 1 day after you deposit money.

      • Wendy

        They Have changed in response to many issues months ago about FDIC, Government DD, & ATM fees have ben changed:

        Federal or state government benefit or payment (e.g., Federal tax refunds or social security payment) transferred directly to the Member’s Bluebird Account by the Member’s employer or relevant government payer. To enroll, the Member will need to provide the Member’s employer with the Direct Deposit enrollment form available on the Bluebird Site or any alternate or additional form requested by the Member’s employer. In the case of government payments, the Member will need to provide the account and routing numbers on our Direct Deposit form to the government payer, Funds transferred via Direct Deposit generally will be available on the day we receive the transfer, and you may review your periodic statements or transaction history on the Bluebird Site or call Customer Service to verify that each Direct Deposit has been received

        New ATM Fees:

        1) Bluebird Member
        with Direct Deposit*$0 w/ direct deposit
        2) Bluebird Member without Direct Deposit* 2.00 fee

  • The Kid

    Check the FAQ’s…they hold money 5 days…back to the future of the old style banking where banks (WM) gets rich off the float :-(

  • The Kid

    …and no FDIC!!! Just how stupid do I look??? Oh, that’s right…this is Walmart…what was I thinking?!? :-/

    • http://twitter.com/Themyscira David Matthew

      Why would the have FDIC???? It’s not a bank or a bank card… Christ people are stupid.

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  • Chuck

    DO NOT transfer money from checking account to this card. I have been waiting 6 days for funds that cleared my bank account the next day. If you need to get money to someone, this card is NOT it. You can mail a check faster than you get credit for your own funds with Bluebird. Bluebird is the choice if you have NO other options. And you do not need funds in a hurry.

    • ermahgerd

      That’s what you get for not reading/researching before you buy. All the info is right there on their website.

      • CE

        @disqus_SstCNluNPS:disqus, it’s nearly impossible to find information on the bluebird website. And what’s there is really lacking.

  • Guest

    Have you tried withdrawing your money in the checking account and putting it on your card at Walmart with the cash?

    • James

      I just transfered everything out into my checking account. I hope it doesnt take a million years for that to happen

  • Johnny Burgos

    Esta es la peor tarjeta que existe, he tratado de activarla 3 veces, y 3 veces a sido negada, customer service solo me dice que fue negada pero no me dice el porque, me han transferido a varios departamentos, y nadie me da razon alguna, por ultimo revise todo el procedimiento de activacion junto con un manager, (porque para esto ellos trataron de hacerme entender que es mi culpa que puse mal mi informacion) y no encontramos falla alguna, esta persona trato de transferirme nuevamente, y le dije que lo que voy a hacer es ir al walmart vaciar la tarjeta, y despues meterla en el triturador, por eso no la recomiendo, solo es una perdida de tiempo y dinero porque nadie me va a regrezar los $5 que me costo, porque ni eso vale

    • http://www.facebook.com/dunttt Jon Lewis

      yeah maybe try and translate that spanish