Personal finance digression: putting Mango in "time out"

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I periodically write about high-interest accounts which I think are obvious choices for people with basically unlimited access to cash. In June I wrote that Mango prepaid cards had stopped accepting new applications. Shortly after that, the similar Union Plus Prepaid card was discontinued and cardholders were told that our accounts would be closed and a new prepaid card provider would contact us by September 16, 2015.

Reminder: why these cards were great

Although it was never advertised or clearly communicated, the Mango and Union Plus prepaid cards were great savings vehicles for two reasons:

  • the linked 6% APY savings accounts did not, in fact, require any employer direct deposits to have their well-above-market interest rates triggered;
  • the prepaid card balance allowed Automated Clearing House (ACH) "pulls" initiated by most credit cards and banks.

That meant that simply parking $5,000 (or $15,000 — cardholders were allowed 3 distinct accounts with a $5,000 limit on each 6% APY savings account) in the linked savings accounts allowed cardholders to generate a little over 5% APY (after a $3 monthly fee) on what were completely liquid funds: each month, the interest could be moved from the savings account to the linked prepaid card account and withdrawn as a transfer to most bank accounts or as a credit card payment.

The new Mango product is not the same as the old Mango product

In July, Mango announced that they would transition from their existing MasterCard prepaid product to a Visa prepaid product, and invited existing cardholders to apply for the new product.

I've now completely transitioned one of my accounts to the new Visa prepaid product, and am not impressed. Here's what I know so far about the new product, and about transitioning from the old product:

  • Once you activate your new Visa prepaid card, your prepaid and savings account balances instantly transfer to the account you access at my.mangomoney.com, rather than at rev.mangomoney.com;
  • You can continue to make ACH deposits to your new, Visa prepaid account using the First Bank & Trust routing number you used previously (114994196) using your First Bank & Trust account number;
  • You can no longer make ACH withdrawals using that account information;
  • You can also not make ACH withdrawals using the Sunrise Bank routing number (091017138) that comes with your Visa prepaid card.

The new accounts have been around for too little time to provide definite answers to the following questions:

  • Do you need to receive $500 in direct deposits to qualify for 6% APY on the new savings accounts?
  • If so, what direct deposits qualify?
  • Is the $2,500 daily purchase limit enforced?

The answer to these questions is essential since the principle benefit of using these accounts for your high-interest savings was their liquidity. If the $2,500 daily purchase limit is enforced, than it would take 2 full days to withdraw $2,500 from the prepaid account by buying, for example, money orders. If the daily purchase limit is not enforced, then while there would be a slight inconvenience, you could still withdraw a $5,000 balance by simply buying five $1,000 money orders at a cost of roughly $3.50.

Likewise, if a $500 direct deposit is required to trigger the savings account's high interest rate, that will require also finding the time each month to move that $500 back to cash using a method besides ACH pulls.

Neither of those are deal-breakers, but they're both far short of complete liquidity.

I don't trust this company enough to find out

I'm not planning to close my Mango accounts for now, but I am putting them in "time out:" I'm withdrawing all the money from my accounts and redistributing it. In the case of my "old" MasterCard account, that means simply making ACH withdrawals from the linked checking account. In the case of my "new" Visa account, it means buying cheap money orders, since ACH withdrawals no longer work. Since I haven't maxed out my Consumers Credit Union Rewards Checking account yet, I'll park the money there until the dust settles and earn a "mere" 5.09% APY on it.

I'll keep an eye on the situation and if the state of play evolves significantly I'll be sure to update my readers.

In the meantime, here are two invaluable resources regarding all things Mango (if you don't mind wading through the personal attacks):