Hey FDIC: Many Prepaid Debit Cards Already Meet Your Needs

FDICYesterday, the FDIC issued a press release announcing they are embarking on a pilot program to evaluate the feasibility of insured depository institutions offering safe, low-cost transactional and savings accounts. The FDIC wants banks to participate in the program to offer electronic deposit accounts with certain product features. We applied the FDIC’s wish list to a number of existing prepaid debit card products on the market to see how they stack up. Here’s what we found.

The FDIC published a “template”, or wishlist of features that they would like banks to provide to low income or underbanked individuals. The template is available here. The template is described as follows:

The FDIC Model Safe Accounts Template provides insured institutions with guidelines for offering cost-effective transactional and savings accounts that are safe and affordable for consumers. The accounts reflect the following guiding principles: transparent rates and fees that are reasonable and proportional to costs, access to banking services that feature FDIC insurance, and the protections afforded by applicable federal and state consumer protection laws, regulations and guidelines.

We thought it would be interesting to compare the feature list from the template with a couple of existing prepaid debit card accounts. While several prepaid cards met or exceeded many of the FDIC features, the MangoMoney MasterCard from MPower Labs fit the requirements nicely.

The FDIC template included a number of “auxiliary services and fees” that we did not compare (in the interest of time), however, the MangoMoney Card seems to be a great example of a product that fits the primary requirements the FDIC has for cost effective transactional and savings accounts.

Below is a table comparing the FDIC wishlist features (on the left) with the MangoMoney card features (on the right). (note: as always, make sure to read a card’s fees and terms and conditions – the features and fees listed below are subject to change!)



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FDIC Feature List How the MangoMoney Mastercard Meets the FDIC Feature List

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Card-Based Electronic Account Check. MangoMoney provides both a card-based transaction account and a savings account

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No Overdraft or NSF Fees Check. No overdraft or NSF fees on the MangoMoney card.

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Interest Bearing Savings Account Check. As of August 11, 2010, Mango provides 5.10% APY on savings.

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Free Direct Deposit Check. MangoMoney provides (and encourages) use of its free direct deposit

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Free Automatic Saving Check. MangoMoney provides free tools to transfer to savings. (May not be automatic, but may transfer by web or by phone)

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Free Online and Mobile Banking / Bill Pay Check. MangoMoney users can pay billers by EFT (with PAN and Routing Numbers) or by providing their debit card number.

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Free Electronic Statements (with Consumer's Consent) Check. MangoMoney provides free online account statements.

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Opening Balance from $10-$25 for transaction account, $5 for savings Check. MangoMoney has no opening balance requirement for the transaction account, and a $1 opening balance for savings (users must have Direct Deposit to qualify)

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Monthly Minimum Balance ($1 for transactional, $5 for savings) Check. MangoMoney has no minimum balance for either account.

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Monthly Maintenance Fee (under $3 for transactional, free for savings) Check. MangoMoney has $0 monthly maintenance fees if $500 is deposited the prior month.

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Money Orders / e-Checks (2 free per month) Check. MangoMoney charges no fees for “e-checks” (if that term is used to refer to EFTs).

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Check Cashing (free if drawn on insured institution, reasonable if not drawn on insured institution). Maybe. MangoMoney does not provide check cashing (although based on a discussion with a MangoMoney customer service agent, it appears that checks may be deposited by mail without a fee). Also, customers near a MangoMoney financial center (only in TX) may cash checks for a fee.

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General Funds Availability (same day or next day) Check. Direct deposits are available same day or next day. Transferred funds (e.g., using the YAP service) also enjoy fast funds availability.

Prepaid debit cards, including the MangoMoney MasterCard, are not perfect. They have fees, and they have limitations. However, for many uses, the cards can be a great (if not perfect) choice.

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