From what I think is a press release:
Charlie, a neobank for the 62-plus demographic, is looking to solve pain points facing retirees and soon-to-be-retirees.
The fintech, which launched last week, allows account holders to withdraw their Social Security benefits up to four weeks early. The free service is available to account holders who link their Social Security direct deposit to their Charlie deposit account, said Kevin Nazemi, the fintech’s co-founder and CEO. …
I don’t understand any of this. What’s a “neobank”? What’s a “fintech”? A financial institution named “Charlie”? How can they afford to give people money weeks prior to its actual arrival? What’s the catch?
It looks like this is mostly a front for a high interest Visa card, and Charlie takes a cut of Visa's merchant fees for bringing in more card holders.
ReplyDeleteIsn't it ironic and somewhat cruel to put the Vietnam War generation's financial lives in the hands of Charlie? Who thought this one up?
ReplyDeleteWhat do you want to bet that the "early payment date" each month will be the day after the Department of Treasury's direct deposit change cutoff date for their payment to prevent direct deposit changes?
ReplyDeleteAnd, I wonder how they will prevent the client from simply withdrawing the entire check except by charging an excessive fee? You can't make money off interchange fees if the money is just drawn out all at once without some sort of fee. If they do charge excessive fees for a person withdraw their funds, I can foresee at some point in the future there needing to be an investigation as to whether their product represents an "assignment of benefits" which is illegal under the law.
And, as if that is not enough, the press release also indicates the company intends to get into what is essentially a "reverse mortgage" business process as well.
So, potentially a combined re-engineered "paycheck loan" scam with a side of"reverse mortgages".
I really hope this doesn't succeed. I personally already waste enough time every month explaining to angry people that the issue of why their money isn't on their Netspend cards early is an issue between them and Netspend and that SSA has nothing to do with it.
Neobank = virtual only, with no brick and mortar traditional locations.
ReplyDeleteFintech = Financial technology. Usually a shorthand for VC-funded "disruptor" horseshit that's worse at customer service and more predatory than traditional options (at best), to (at worst) outright frauds and Ponzi schemes.
I'd put heavy, heavy quotation marks around the word free in that article. The fact that they're targeting government benefit payments first and not early paychecks says a lot.
Does the bank just lose a month of SSA benefits when a person does?
ReplyDeleteDoesn't sound too bad:
ReplyDeleteFeatures include faster access to their Social Security check, 3% earnings on balances and no monthly fees or minimums. Users will one day also be able to get “frictionless, embarrassment free discounts” just by using their debit cards,
Nazemi said, so they don’t have to do things like show an AARP card or their ID to prove they are seniors. Like many fintechs, Charlie is not a bank — its banking partner is Sutton Bank.
How does this help beneficiaries? They still only receive one check per month, and now they have "Charlie" getting a cut of their hard earned benefit.
ReplyDeleteGetting the funds on a different day than SSA pays it might be useful for some people: this study https://crr.bc.edu/research/timing-of-social-security-checks-is-key/ showed that people who got paid later in the month were more likely to save the money for rent and other big expenses that occur at the start of the following month. Of course it's easy to say that people should budget better and it's the same money so why would it matter, but people don't always act perfectly logically. Not endorsing this particular service or anything, just noting that changing the timing of payments could matter to some people.
ReplyDelete