Update: The Mango MasterCard is no longer available. As an alternative, check out the Walmart MoneyCard Prepaid MasterCard.
We recently learned of a prepaid credit card that will soon offer a high interest rate savings account to its customers. Believe it or not, the savings account will pay 5.1% interest, which is more than triple the interest rate offered by other online savings accounts. Before we get to the details, however, I little bit of background is in order.
There is a battle being waged in the electronic payment industry. The battle is being fought between traditional credit cards, bank debit/ATM cards, prepaid credit cards, and other mobile payment systems. In short, these methods of payment are fighting for your business. While you probably don’t spend your days studying the electronic payments industry, evidence of this battle is everywhere. Here are just a few examples of how the card industry is fighting for your business:
- Sign-up Bonuses: More and more credit cards are offering statement credits or cash business to new card holders. The Chase Freedom Visa, for example, offers a $100 bonus to new card customers.
- Lower Fees: While credit card fees have been on the rise, the fees charged by prepaid credit cards have fallen significantly. Several prepaid cards now waive an activation fee and charge virtually no monthly fees for purchase transactions. Mango Money, Yap MasterCard, and Green Dot are examples of these new no fee or low fee prepaid credit cards.
- Checking Account Bonuses: Every where you look banks are offering either cash bonuses or interest rate bonuses to get your business. EverBank, for example, offers a 3-month bonus interest rate for new accounts.
- 0% Introductory Rates: While zero percent intro rates are nothing new, credit cards have become more aggressive in their promotions over the past several months. Perhaps the clearest example of this comes from Citi balance transfer credit cards, several of which now offer 0% balance transfers for 18, 12, or 7 months, depending on your credit worthiness.
Now prepaid credit cards are entering the fray. By offering high interest savings accounts, they give customers a chance to earn a few extra bucks and encourage saving at the same time. So let’s take a look at the 5.1% deal.
The deal comes from the Mango MasterCard Prepaid Card. This card is without doubt one of the best prepaid cards available today. There is no activation fee, and if you load just $500 on the card each month, they waive the monthly fee. Load less than that, and the fee is only $5. The card can be used to make purchases online or over the telephone, and it is accepted anywhere that takes debit MasterCard (which is just about everywhere). In fact, I ordered a card just yesterday to see how it works (I’ll report on my experience later).
Earlier, Mango announced that it would be adding a high interest savings account linked to the Mango MasterCard Prepaid Card. Full details of the offer have not be released, but Mango did disclose that the account would pay 5.1% interest on balances up to $5,000. The $5,000 limit may be restrictive for those with higher balances, but it could be a great place to park an emergency fund. Here are the details as set out in Mango’s press release:
The Annual Percentage Yield (APY) as advertised is effective as of June 17, 2010. Rates are subject to change at any time and may change after accounts are opened. The APY advertised applies only to the portion of your savings account balance which is $5,000.00 or less. No interest will be paid on the portion of your savings account balance which exceeds $5,000.00. Please see the Savings Account Customer Agreement for full disclosures.
For more information on the Mango MasterCard Prepaid Card and linked high interest savings account, visit the official Mango Money website.