These days, the odds of finding a savings account that carries a 5.1 percent interest rate are almost as good as your chances of, say, stumbling across a pot of gold.
But such an account does indeed exist, with some caveats: it’s attached to the new Union Plus prepaid card, which is available to members of the A.F.L.-C.I.O., which represents more than 12 million union members. But any worker can join Working America, an affiliate of the A.F.L.-C.I.O., to get access to the program.
There’s another catch: the attractive interest rate only applies to the first $5,000 of savings. Anything above that amount will earn 0.10 percent. Still, the entire package compares favorably with many other prepaid cards on the market, which are known for charging fees at every turn.
“We wanted to create a debit card for working America,” said Leslie Tolf, president of Union Privilege, the consumer benefits arm of the A.F.L.-C.I.O. “We are trying to avoid, as Elizabeth Warren would say, the ‘tricks and traps’ of bank fees.”
But that doesn’t mean it’s completely free of fees.
Users can avoid the $2 monthly maintenance fee if they use direct deposit to load the card (and Ms. Tolf said users have the option of loading only a portion of their paycheck). You can also escape the fee if you had at least $500 on the card the month before, which you can also load for free via PayPal or a bank account.
You can put cash on the card, too, but it will cost you $4.95 each time. To do that, you need to buy a GreenDot MoneyPak at a retailer that sells them. Withdrawing cash from an A.T.M. costs $1.50 (plus anything the bank providing A.T.M. charges), while a balance inquiry costs 50 cents. But cardholders can retrieve cash at no charge at certain retailers.
Meanwhile, there are no activation charges, inactivity fees or any charges to make a purchase. And you can pay bills through their Web site, but it will cost you $1 for each transaction. Using the card outside the United States, meanwhile, will cost 2 percent of the transaction amount.
The savings account is fully insured by the Federal Deposit Insurance Corporation. And a spokesman for Rev Worldwide, the processor and distributor of the card, says that the 5.1 percent interest rate is not an introductory offer. It is subject to fluctuation, as with any interest rate, but he said that there are no plans to make changes anytime soon. Let’s hope it stays that way.
Ms. Tolf said that members can use the savings account as a personal Christmas club savings program, or simply use the card for day-to-day transactions.
When it comes to fraud, she said that cardholders are only responsible for up to $25 if someone managed to figure out their PIN and use the card.
If you’d like to open up an account but are not a member of the A.F.L.-C.I.O., you can join Working America. You will be required to make a donation to the cause, though it can be for as much or as little as you wish, and you are only obliged to donate once.
What do you think of the new prepaid card and its savings account?
Article source: http://feeds.nytimes.com/click.phdo?i=0ceebc9cc089a8608be51dcf0285800e