The service looks to appeal to younger customers, who may not yet have a bank account, and those who want to do all their banking using a smartphone. And while services like Apple Pay and Google Pay link to existing accounts, the service from T Mobile acts like an interest-bearing checking account, by partnering with online banking service provider BankMobile, a division of Customers Bank.
A number of mobile-based banking services, like Simple and Chime, are going the low/no-fee route and looking to pick up customers who want to cut ties with traditional brick-and-mortar banks.
These services tend to offer similar capabilities with no monthly cost, or forgo a monthly cost if the customer signs up for direct deposit. They also tout automatic savings features, like rounding deposits up and adding the difference to a savings account, along with budgeting other app-based money planning tools.
Some services, however, don’t offer a way to deposit physical check or cash, so they won’t suit customers who need those features. The T-Mobile Money service does offer mobile check deposit in its app. The T Mobile service also looks to stand out by offering perks for those who pay for wireless service with the carrier.
The most notable perk of the new service is a 4 percent APY on balances for customers who also have its wireless service, up to $3,000, and 1 percent after that. Customers without accompanying T Mobile wireless service earn 1 percent APY.
According to financial services site BankRate, the average savings account pays .09 percent APY. Interest rates as high as 2.25 percent are available but typically require five-figure minimum deposits.
The service offers other benefits, including 55,000 no-fee ATMs around the world, via the Allpoint ATM network.
For its postpaid wireless customers who deposit at least $200 in their accounts each month, T Mobile will also cover overdrafts up to $50 without a fee, as long as the money is deposited within 30 days. The feature covers purchases, but not ATM withdrawals.
The company previously attempted a banking service called Mobile Money from 2014 to 2016, which was meant to appeal to potential customers who didn’t have a checking account. The service came with a reloadable Visa prepaid card, and let users deposit checks and use no-fee ATMs.
The new T-Mobile Money service seems more likely attract a different clientele: those who are looking to cut monthly and overage fees and boost the interest on their accounts.