Walmart Also Wants You to Win Prizes for Saving Money

Another look at gamifying savings.

Continuing this week’s theme of “gamifying human behavior,” Billfolder StateLady tipped me off to a recent Atlantic article about the Walmart MoneyCard:

How to Trick People Into Saving Money

The Walmart MoneyCard is a reloadable prepaid debit card that also includes a “vault” feature; users can “stash” card funds in the non-interest-bearing vault and withdraw those funds when they’re ready to spend them.

You do not need to be a Walmart employee to get a Walmart MoneyCard, and the application doesn’t require a credit check. (There are a pile of fees associated with the card, and we’ll get to that.)

As The Atlantic notes, there’s also a new incentive for MoneyCard vault users:

Then, late last year, [Dawn Paquin] got an email saying that a “prize savings” feature had been added to her card. If she kept some of her balance in a virtual “vault,” meaning that it would not show up in her available funds, she would be eligible to win a cash prize in a monthly drawing — up to $1,000. Every dollar in the MoneyCard Vault would equal an entry in that month’s drawing. This caught her interest. A prize would go a long way toward her being able to buy a car. It also made her focus on what all those “stash” requests were about. “Oh, cool, this can work as a savings account, too,” she remembers realizing. So when she got paid, she started setting aside “10 bucks, 20 bucks, whatever I could.”

The idea, as The Atlantic explains, is that people are more likely to save money when they think it might help them win a cash prize. They compare the thrill of winning $25 right now to the slower gratification of earning interest over years, to which I would like to say of course, do you know how many years it takes to earn $25 in interest?

Yesterday we profiled Long Game’s savings account, which claims to offer the high interest rate of 0.1 percent (they don’t use the term APY, so I won’t either). If you saved $1,000 every year, it would take you seven years to earn $25 in interest. (You’d also have $7K saved, which is worth mentioning.)

My savings account offers 0.75 percent APY, and I earned $34.67 on that account last year. I earned $59.83 in total interest on all of my checking and savings accounts combined, which is not bad, but to suggest that people might prefer short-term prizes to the long-term magic of compound interest ignores the fact that current interest rates are barely worth waiting for.

So sure, I can totally see why winning $25 now—or $1,000, which is like a lifetime’s worth of bank interest at once—would be attractive.

Now let’s figure out how long that $25 will last before it gets eaten up by the Walmart MoneyCard fees. We’ve got:

• A $1 fee to open the card
• A $5 monthly charge that is only waived if you deposit $1,000 to your card in the previous month
• A $3 “Rapid Reload” charge if you want to add money to your card at a participating Walmart store
• An “up to $4.95” fee if you reload your card through the Green Dot Network
• A $0.50 ATM balance inquiry fee
• A $2.50 ATM withdrawal fee

So if you open your card, add $500 at a participating Walmart store, stash $100 of your balance into the vault, and win a $25 prize, $9 of that prize will go directly to the card opening fee, the monthly charge, and the Rapid Reload charge. If you hadn’t won the prize, that money would have come out of your card balance.

I get that cards like the Walmart MoneyCard are often one of the most accessible options to people with bad credit or little access to traditional banking.

I also get that winning a prize with the Walmart MoneyCard probably represents more money than card users would have ever earned in interest, even after years of traditional banking.

But I can’t say that I like the Walmart MoneyCard, even though I’ll give it some credit for trying to incentivize savings.

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