T-Mobile plans a big nationwide push to sign up customers for no-fee checking accounts, part of an effort by the company to expand beyond its roots as a discount mobile phone service.
Consumers, who don’t have to be T-Mobile wireless subscribers, can sign up for a “T-Mobile Money” account via a mobile app or in a T-Mobile store. The accounts come with no monthly fees, overdraft fees, or other charges that banks commonly assess.
The accounts are actually held with T-Mobile’s partner in the program, BankMobile, a division of Customers Bankcorp cubi , a Pennsylvania-based bank with about $10 billion of assets.
T-Mobile started offering the checking accounts in November as a pilot program, when it released its mobile banking app for Android and iOS devices. But the company did little to market it or promote it.
Now the offering will get a marketing push online and in T-Mobile’s thousands of retail stores, Jayme Johnson, T-Mobile’s senior director of financial services, says. The aim is to attack another business beyond wireless where customers are dissatisfied, Johnson explains. Under CEO John Legere, T-Mobile has been the fastest-growing wireless carrier for the past six years, but as that market nears saturation, Legere has been looking for new targets. Last week, T-Mobile unveiled the start of an attack on the cable TV market, another industry unloved by its customers.
In addition to the lack of fees to entice customers, T-Mobile’s checking account offers above-market interest rates. It currently pays customers 4% interest per year on amounts up to $3,000 for T-Mobile wireless customers who deposit at least $200 per month into the account. All other customers and amounts over $3,000 get 1% interest (Like with any bank account, T-Mobile can change the rates at any time).
The rates are far more than the average rate of interest paid by banks on checking accounts last year. The average was 0.07%, or $7 on an account with a balance of $10,000, according to Bankrate.com. The average monthly service fee on checking accounts was almost $6 monthly while the average overdraft fee was more than $33 per incident.
But when T-Mobile Money customers use an out-of-network machine, they could be charged fees by that network.
The new T-Mobile Money account is different than a banking-like product the carrier introduced in 2014 that relied on a prepaid debit card account. The earlier program was aimed at signing up customers who didn’t already have a bank account, but it didn’t catch on in a big way.
The new program is aimed at more mainstream customers looking for a better deal from their bank. “It is a general market play,” T-Mobile’s Johnson says.
In the test, the program appealed to both millennials and slightly older consumers in the Gen X demographic as well, she said. “Money and banking has really outgrown traditional banking,” Johnson added, noting that two-thirds of all transactions are made online or on a phone.