NetSpend Savings: Plenty of Flexibility

NetSpend, a retail marketer and distributor of prepaid debit cards, offers an incredible 5 percent APY on the savings accounts attached to their debit cards.  Those cards, marketed on behalf of MetaBank and Inter National Bank, come with FDIC insurance. The savings accounts are available for customers that get a NetSpend prepaid card. Those cards feature a pay account, but they can be linked to a savings account. Some accounts can also get a line of credit linked to their account as well.

I was so excited by it that I had to call and see how I could get in on this deal. I called Inter National Bank. NetSpend’s website indicates that INB has their savings accounts. After four transfers, I was routed through to Jona, a representative of NetSpend.

I told her a few basic details about my needs. Just for clarity, let me say that I am not actually a Colombian trafficker with scores of private bankers.  Here’s roughly how our conversation went:

Me: “I’m interested in making regular transfers of up to $10,000 onto an account. My private banker is not sure about this, so I need to make sure that I can give him all of the details.”

I’ll paraphrase for Jona. She told me that I’d have to sign up for a NetSpend Card first. There a bunch to choose from, but they all have the same basic features.  She even helped me to work through their web page to the terms and disclosures. I had to go to “sign in and register” for an account to see those fees.  There are fees to use the spend account if you pay-as-you-go: $1 per credit transaction and $2 per debit transaction.  You can avoid those fees, she said, by signing up for the Fee Advantage  plan for just $9.95 per month.

That fee essentially knocks out my interest if I have less than $2,387 in my account. NetSpend says that their target market is mainly low-income households and people who want to restore their credit.  Here’s how NetSpend explains their business:

“NetSpend’s mission is to empower consumers with the convenience, security and freedom to be self-banked. NetSpend targets the 84 million United States citizens who lack or choose not to have a traditional bank account to become full participants in mainstream economic life. This low to moderate income (LMI) population receives over $1.1 trillion in payments from employers, state and government entities, and holds enormous spending power. NetSpend’s customers range from people who don’t have the credit histories or minimum account balances that banks require, to people who want to avoid confusing fee structures and statements, to casual users such as teens managing their allowance and travelers who want to protect their cash on the go.”

That was fine.  I went on to assure Jona that I don’t mind a few fees.  I’m mainly interested in wire transfers. Tell me, though, where will my money be?  My private banker definitely wants to know where I keep my money.

She said that it would either me deposited at MetaBank, a small thrift in South Dakota, or at Inter National Bank, another small thrift with offices in several locations in Texas near the border of Mexico.  She couldn’t tell me which one for now.  When I got my account, they would send me an electronic statement.  At that point, they would let me know where my money was deposited.  In the meantime, it would be “up in the air.”

Inter National Bank’s stateside headquarters are in McAllen. Inter National Bank is FDIC insured as well. It is a subsidiary of Banorte Financial Group. They specialize in cross-border banking and advertise their ability to help clients with the acquisition of Latin American vacation homes and a variety of international transfers.

I thought – gee! I’ve been looking for a bank like this for a long time. I felt like I needed to tell her more about my special situation.

“I do a lot of private banking in South America.  A lot of it is from Colombia.  Are there any restrictions on making transfers from my offices in Medellin?”

No, that’s no problem, she said.  You can only have three accounts, though, and you can only transfer $10,000 at a time. If you want to make a direct deposit, you can only transfer up to $7,500. You can also transfer money from your account to another Net Spend account via a text message.

“That’s helpful, because I have a small group of close friends who often need money, fast.  We don’t generally like to use branch banks if we can help it.  Oh, another thing, I’m worried about privacy.  I see that you will make a temporary card for me.  Tell me more.”

Well, said Jona, that card doesn’t have your name on it.  You’ll be sent a permanent card later.  Once you sign that card, your temporary card will no longer be valid.

“Well,” I said, “that suits my purposes. Jona, this just seems too good to be true!”

Oh, said Jona, it is definitely real.

One more thing: sometimes I need to get my money in out of the way places.

Jona referred me to a list of their local partners.  I perused the places in Rio Grande City where I might reload my account:

• Chachi’s Bail Bonds/Moneygram (answering machine says, “if I’m not here, I’m at the courthouse, or the county jail”)
• Dinero Express ( a one-stop shop of financial services for the “immigrant segment”, operated by BBVA).
• El Tigre (#’s 2, 9, 17, 3, and 27)
• Mr. Checks (check cashing)

Again, that’s just the kind of flexibility that I need. I did see that I’d have to pay some high fees to withdraw money – as high as $4.50 per reload – but that’s how it goes.

My conclusion is that the NetSpend product, with its suite of features, is a great choice for someone who wants to move large sums of money from places all over the globe, while maintaining a very discrete profile. It does offer a high rate of interest on savings, but fees make that a viable option only for customers that have at least $2387 to put in the bank.