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With Amex Bluebird, You Don’t Need a Checking Account Anymore

Can you bank without a checking account? With its new product Bluebird, American Express is betting that not only that you can, but that you’ll save money doing so.

Amex Bluebird is a checking account alternative with surprisingly few fees.I’m always surprised when I see new construction along busy commercial corridors and later learn that it will become a new branch of XYZ Savings Bank.

Presumably, the rise of ATMs dramatically reduced the number of banking transactions handled by a bank teller. Today, it’s possible to most banking on a smartphone including (at least at some banks) depositing checks.

Yet banks are still investing millions in branches. Not because we need more places to take our rolled coins, but because those branches serve as sales offices where the banks can open new accounts and loans.

There are times – like applying for a mortgage or getting a business loan – when there’s little substitute for a face-to-face meeting with somebody who can get to know your needs and walk you through a complicated application.

But the other 99 percent of the time, what we need are simple savings and checking accounts that work well and don’t cost much.

Free checking accounts are hard to find…

Recently, that last part has become a sticky issue.

I’m sure, at one time or another, almost everybody has encountered a so-called free checking account that’s not really free. These accounts either require minimum average balance to waive a monthly fee or they charge fees for everything else you want to do, like using an ATM.

And let’s not forget overdraft charges of $30-$40 for the “privilege” of spending money that’s not in your account. Fortunately, you can opt out of this service so that non-sufficient funds (NSF) transactions will be declined instead.

…unless you know where to look

New products are popping up that challenge traditional checking accounts. Online checking and bill-pay accounts like those offered by Capital One 360 and FNBO, offer free no-minimum balance checking accounts – there just aren’t any branches.

And just this year, American Express launched a new product called Bluebird, that’s not exactly a checking account, but you’d be hard-pressed to tell the difference.

(*Disclaimer: This Website has affiliate relationships with the aforementioned products.)

About Amex Bluebird

Bluebird is positioned as a checking and debit alternative, except that it comes with a free debit card, and for $26, a book of checks.

Bluebird promises no monthly fees, overdraft fees, or minimum balance requirements. Bluebird includes online bill pay, ATM access, and mobile account management. And as long as you have something directly deposited into the account each month, Bluebird’s only fees are $2 if you load the account with a debit card, $2 for an out-of-network ATM, and $26 for a book of checks.

(Bluebird uses the MoneyPass ATM network, which from what I can tell includes a mix of credit unions, local banks, and ATMs in certain national chain stores.)

Banking without a bank

Although American Express is a bank – they don’t have branches like Bank of America or Chase where you could saunter in and deposit the $2,500 cash you made from selling your old valuable guitar last weekend. To solve that problem, Amex has affiliated Bluebird with WalMart, so you can deposit cash to a BlueBird account at virtually any WalMart cash register.

Bluebird also offers up to four sub-accounts, which can be used to separate expenses or share an account with family members (think giving a teenager an allowance). Each sub-account gets its own debit card. If desired, users can set daily spending and ATM limits on sub-accounts.

Admittedly, it’s hard to innovate around something as mundane as a checking account. They’re heavily regulated, and even so, there’s not much marketers can do to make them different or exciting. But Bluebird’s sub-accounts is an admirable step. I’ve found the sub-accounts in my Capital One 360 savings account quite useful for segregating money in my emergency fund from money I want to use to buy my next car.

Who Amex Bluebird is for

I could see American Express Bluebird being a convenient alternative to a traditional checking account for many – especially if you bank primarily online or could use the sub-account feature (such as separating individual expenses from those you split with a roommate or significant other). In that case, it could also be a useful secondary account for keeping track of shared household expenses, club funds, or other unique situations in which a traditional checking account could be a hassle.

Learn more about American Express Bluebird here »

What do you think? Would you use a product like Bluebird as a checking account alternative? Why or why not? How do you get around checking account fees?

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About David Weliver

David Weliver is the founding editor of Money Under 30. He's a cited authority on personal finance and the unique money issues we face during our first two decades as adults. He lives in Maine with his wife and two children.

Comments

  1. Like you mentioned at the end, Bluebird is a great to to handle organizing payments when multiple people are contributing such as with roommates.

  2. Were you paid to write this? Sounds like an advert. There is no criticism.

    The fees are more than many actual checking accounts. More importantly, if this pulls people away from checking accounts, it probably pulls them from savings accounts as well. This seems like a trap for the underbanked to keep them in a same spot.

    • David E. Weliver says:

      Bluebird is an affiliate which is disclosed in the article body. I try to write about affiliate products/services as objectively as possible while making that relationship known. You can read more about it here: http://www.moneyunder30.com/about/legal#disclosure

      I think the disadvantage of not being linked to a savings account is a good point, and though I’m sure some unbanked people will use this, I wouldn’t have covered it if it was a product targeting that market. (You won’t ever see me recommending a fee-laden prepaid card, for example.)

  3. Yeah, this is totally not free and shouldn’t be touted as a free checking/debit account when there are fees to load + fees for checks.

    While truly free checking/debit is next to impossible to find these days, I know WF — and I’m sure other banks, though I haven’t looked — waves their crappy fees (hey, those weren’t there if you opened an account 10 yrs ago!) if you set up an automatic transfer to savings. That’s how I got free everything before I qualified for the “Preferred Member” account.

    Also I wouldn’t recommend anything that’s not a Visa or Mastercard for a primary account. It just makes things difficult if you ever travel internationally.

    All that said, this is a creative alternative and will hopefully push banks back in the right direction.

    • Charles Schwab Investor Banking
      -Free
      -Unlimited ATM Reimbursements
      -Nominal interest rate return

      I switched about a year ago and it’s phenomenal. No more hassle in trying to figure out where the nearest ATM is for your bank. The service is fantastic too.

      • Completely agree. Running on Schwab for 2 years now and extremely happy. Haven’t paid a fee for anything. It is even better if you have any kind of investments (like a ROTH IRA). And you can call anytime and they walk you through whatever it is. Recommend over just about anything else out there. Same as below comment.

  4. While Bluebird is certainly an option for low fee banking, especially if you don’t have to use checks and save yourself the $26 to buy them, I wouldn’t rank it ahead of most online checking accounts.

    The gold standard I’ve found for online checking with direct deposit is Charles Schwab. All ATM fees reimbursed worldwide, no fees for ordering checks or deposit slips, mobile check deposit and earns a little bit of interest. And their customer service is awesome. The most annoying thing about checking accounts is random fees and finding an ATM. This account solves that.

    Now if you go to some travel mile earning blogs, you will find a great use for BlueBird.

  5. I would suggest if you are looking for an option like that, consider E*Trade. They offer both checking and savings banking products, refund all ATM fees and have no maintenance fee as long as you have at least 1 direct deposit in the account per period. The really nice part is they pay (albeit very low) interest on both their checking and savings products, and because it is with E*Trade you can manage your banking and trading accounts all from the same logon. The checking product includes free bill pay and check deposit via mobile phone as well.