American Express is adding paper checks and deposit insurance from the FDIC to the Bluebird prepaid card it debuted last year with Wal-Mart Stores.
Bluebird cardholders will be able to obtain checks for their accounts that the company will “pre-authorize” in order to prevent overdrafts.
Bluebird cardholders wishing to use one of the checks will inform Bluebird of the check and receive a “preauthorization code” they will include on the back of the check. At the same time, the amount of money on the check will be removed from available funds in the account, the companies said.
Until now, the Bluebird card was not covered for losses by the FDIC. The lack of FDIC coverage prevented customers from having government payments like Social Security, military pay, and tax refunds deposited directly to the accounts. Federal regulation requires that direct deposits of such payments be made into FDIC-insured accounts.
“When we launched Bluebird last October, we were focused on serving the tens of millions of Americans who are not well served by the traditional financial services industry. The unbanked, underbanked, and the unhappily banked are beset by onerous fees and numerous inconveniences,” said Dan Schulman, group president, Enterprise Growth.
“Bluebird is designed to help make their everyday financial lives easier, more convenient and less expensive. Today’s announcement, which reflects feedback from consumers, advocacy groups and government officials, represents the next set of enhancements that further distinguish Bluebird from other financial services options,” Schulman said.
“Funds loaded onto a permanent Bluebird account will be held in a pooled account at an FDIC-member bank. FDIC insurance will not be available for funds loaded onto a temporary Bluebird card,” an Amex spokeswoman added.