America’s No.3 wireless carrier, T-Mobile’s latest foray into a new banking product may be a solution for 8.4 million ‘unbanked’ households -- the 6.5% of the American population who not have access to a checking or a savings account.
T-Mobile Money is offering a new checking account to customers, especially those with post-paid subscriptions, which could eliminate over-drafting concerns that tag with traditional bank accounts. The service, available to anyone and not just its customers, will allow customers to go up to $50 in the red without incurring penalties as long as the account balance is positive within 30 days. The said account comes with no fees and requires no minimum balance. It’s also offering higher interest rates than traditional banks. The accounts are FDIC insured up to $250,000 and comes with an ATM card that can used free of charge at more than 55,000 in-network Allpoint ATMs worldwide.
The account is best suited to a T-Mobile post-paid customer who can get 4% APY on balances up to $3,000 and 1% APY on every dollar over $3,000 when they sign up with their T-Mobile ID and deposit at least $200 each month. Everyone else scores 1% APY on all balances.
These conditions are fairly modest and easy to comply especially at a time when over-drafting charges are a major concern in the U.S. In 2017, Americans paid $34 billion in overdraft charges. This is why many Americans are now shunning which serves as an opportunity for T-Mobile to launch this timely service. Its easy-to-use checking account optimized for mobile use with limited fees could be the key differentiator to make a good impression on the ‘unbanked’ and may also provide a stiff competition to the already established players like Bank of America (BAC), Wells Fargo (WFC), and JPM Chase (JPM).