When 6 Percent Interest Is Too Good to Be True
Savers have taken it on the chin for years, with banks paying almost nothing on checking and savings accounts while happily charging big fees. So when one new financial website offered a 6% interest rate on an insured savings account, you can bet it got a lot of attention.
If you've never heard of Mango Financial, you'll probably see a lot about it soon. The company signed actor George Lopez to a five-year marketing agreement, and Wednesday, it started its national "Save With Mango" campaign to promote its high-interest savings account -- as well as some other products.
Where's the Catch?
If the last several years haven't trained you to be suspicious of bank offers, you haven't been paying attention. Various big banks have tried to charge fees on everything from talking to a teller to not talking to a teller by using an ATM, from making too many transactions on your account to not making enough.
Mango tries to tap into that resentment of Wall Street, calling itself "the fresh way to manage money." Its FDIC-insured savings account promises no monthly maintenance fee and pays 6% interest on deposits up to $5,000.
But if you think that Mango's paying you a sky-high rate out of the goodness of its heart, think again.
Sign Here. And Here, Too.
You see, Mango doesn't let you open a savings account to get that 6% rate unless you also sign up for its Mango Card prepaid program. And that's where the fees start.
Mango charges a $5 monthly fee, but that's waived if you load at least $500 onto your card every month. Want money from an ATM? That'll cost you $2, plus whatever the ATM owner tacks on top of that. And although there's no charge to load the card from another bank account or by direct deposit, its Green Dot (GDOT) cash load feature comes with a $4.95 charge.
Granted, if you actually want a prepaid card, Mango's fees are actually lower than many of its competitors. And the extra interest from the savings account can certainly offset fees from the card.
For an intended audience that has gotten almost no attention from traditional banks, Mango should have broad appeal. But if all you want is a high-yield savings account without all the complications of a prepaid card, Mango's not the answer.
More on credit and debit cards: