Is Walmart The Best Online Bank?

Category: Finance

Everyone knows that Walmart is a discount department store, and an online retailer as well. But did you know they offer free checking accounts and other banking services? Here's the scoop on the services offered by WalMart's GoBank and other online banks…

Are You Unbanked?

Walmart entered the banking business in October 2014, partnering with GoBank to offer free* checking accounts with online bill payment, a Mastercard or Visa debit card, a U.S. network of 42,000 no-fee ATMs, direct deposits and a mobile image-capture app for depositing paper checks, plus the ability to deposit cash at the cash registers of nearly every Walmart store (Vermont and Wyoming excluded).

Should Chase, Wells Fargo, and other big banks be worried?

Not really; Walmart is not going after customers who need the full spectrum of traditional banking services. GoBank, an FDIC-insured bank since 2012, offers only checking accounts. No savings accounts, CDs, or loans are available. It’s just a place to park money you intend to spend soon. GoBank is owned by Green Dot Corporation, the company that launched the prepaid debit card industry in the year 2000.
Online Banking Options

The target market of GoBank is the estimated 9.6 million “unbanked” Americans who either don’t want or can’t get traditional bank accounts. GoBank does not check credit histories or the Chex System database of people who have bounced checks. It only verifies account applicants’ identities and residences using Social Security Number and third-party databases. Additionally, GoBank is only for mobile device users; accounts can be accessed only via the bank’s mobile app for iOS or Android smartphones.

Anyone considering a GoBank account should read the bank’s user agreement closely. For example, “free” checking is free only with $500 or more in direct deposits during a given month; otherwise, you’ll be dinged $8.95. Paper checks deposited via the mobile image-capture app are subject to a 10-day hold period. There’s a foreign-ATM fee of $2.50 in addition to any fee charged by the ATM holder, and if you use your debit card to buy from a non-U. S. merchant, a whopping 3% surcharge applies.

Overall, GoBank is not the best choice for online-only checking accounts. Here are some others that are rated higher:

Other Online Checking Account Options

Ally Bank offers interest-bearing online checking accounts, a vanishing breed in today’s banking market. As of this writing, account balances below $15,000 earn 0.10% APR while larger balances earn 0.60%. That’s a pittance, but a bigger pittance than most banks pay.

CapitalOne 360 offers checking and savings accounts. The only potential fee is $25 to stop payment on a transaction. There are no punitive overdraft fees, but a negative balance is charged interest at an annual rate of 11.25%. You can withdraw cash at about 40,000 no-fee ATMS, but there is no way to deposit cash. Photo-deposits of paper checks are accepted.

Simple offers checking and savings accounts. You can create a budget and Simple will tell you how much of your balance is “safe to spend” without running short at the end of the month. Simple also pushes notifications to your phone for all transactions, which can make fraud easier to spot.

Credit unions and community banks should not be overlooked in any search for customer-friendly, no-fee or low-fee banking services. They offer loans, too, often at rates lower than those charged by big banks.

Does an online-only bank appeal to you? Your thoughts on this topic are welcome. Post your comment or question below...

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Most recent comments on "Is Walmart The Best Online Bank?"

Posted by:

23 Jul 2015

Helpful article, Bob. We like Ally Bank, and to add to your details, they also have an online savings account with a current interest rate of 0.99% APR on (I think) any balance amount. It's the best we have found as far as interest goes.

Posted by:

Ryan James
23 Jul 2015

I would not bank with Walmart if it were the last bank in the world.

I opened a Charles Schwab account. No currency exchange fees, no ATM charges, and if a bank charges one, Schwab refunds the amount.

That is my kind of banking. My Bank of America card is just a money place holder while I transfer funds to the other account.

Posted by:

23 Jul 2015

My local bank doesn't have any fees for checking or ATM services.
I have direct deposit and 10% of my pay goes into my savings account.
I don't need to worry about overdraft fees as I have it set up so that any overdraft will be taken out of savings and a notice is immediately sent to my mobile phone.
They also inform me of any large transactions and ask for confirmation to prevent fraudulent activities.

Posted by:

23 Jul 2015

If you have a military connection, run - do not walk - to sign up with USAA. Their online banking is easy & convenient, their customer service top-notch, and they refund ATM fees as well. My wife & I have been customers for nearly 20 years. Not only do they have our checking/savings and credit card accounts, they also have our auto and home insurance. We wouldn't bank with anybody else!

Posted by:

MW Stewart
23 Jul 2015

This is a really useful, albeit brief, article. While not specific to me, I can see this kind of information -- more particularly the non-Walmart material -- being really useful to a lot of people for whom traditional commercial banking is either not an option or is an unattractive option. Thanks, Bob

Posted by:

23 Jul 2015

You failed to mention that Walmart offers 3% interest on deposits if minimum balance maintained. Better than the.01% I get at Chase.

EDITOR'S NOTE: I didn't mention it because I can't find anything on the Gobank website (or anywhere else) to confirm that. Can you point me to a page that mentions interest paid on checking accounts?

Posted by:

23 Jul 2015

Another very successful online only bank is "Bank of the Internet" based in California. It's one of the oldest internet banks.

Posted by:

Vince Burget
23 Jul 2015

A tip that might help those who want to avoid ATM fees when away from your home bank: It is possible to use your debit card to get up to $100 in cash when checking out of any Walmart. No fee is assessed by the issuing bank (at least that's my experience).

Posted by:

David Sparkman
23 Jul 2015

Walmart pays enormous fees for credit card sales because of their huge volume. They could increase their bottom line if they could recoup those banking charges for credit card purchases. Hence they have been trying to become their own bank. They get the kinks worked out and become familiar with the industry, then they buy GoBank. (First they must buy a lot of politicians.) Once they have their first bank, then they can buy other banks and continue their growth into a huge corporation.

Posted by:

23 Jul 2015

Actually you can now deposit cash at CapitalOne360 in their partner ATMs. They pay 0.2% on Checking Accounts with no minimum balance (higher on larger balances), 0.75% on savings accounts with no monthly fees. Free bill pay, with no limit on the quantity of transactions. We now do everything online with this bank and love it - We have been a customer for over 10 years.

Posted by:

23 Jul 2015

Discover also has online banking.

Posted by:

24 Jul 2015

If you qualify, it's hard to beat USAA. Their services always seem to be at the top of any list of banks being compared. Walmart? Not so much...

Posted by:

24 Jul 2015

I have direct deposit with both CapitalOne360 and Ally Bank. I chose both of them because there are no fees for using ATMs in the Allpoint network. Ally reimburses any fee charged for ATM use.
I never heard of Simple. I would not bank with Walmart or any other bank which charges a fee for a checking account and/or ATM use.

Posted by:

24 Jul 2015

Quite an off-topic question.
Does Walmart or any of the other online banks listed above offer free accounts to foreign nationals residing abroad?

Posted by:

darcetha Manning
24 Jul 2015

I use Arvest Bank. They have free checking and free online and mobile banking.

Posted by:

02 Aug 2015

Gobank does not pay interest on any money in that account. (I've had an account for last year, no interest ever.)

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