Chase Liquid: JPMorgan Chase's New Play For Low-Income Customers

JPMorgan Chase wants it all, catering to everyone from the richest customers who provide hefty returns on deposits to the poorest who are willing to pay fees for a la carte financial services.

On Tuesday, the bank announced that it would launch its own reloadable prepaid card this summer called Chase Liquid. The card will cost $4.95 per month and will be available to any customer over age 18. Chase Liquid customers do not have to have to open an account at the bank, but must make an initial $25 deposit onto the card.

"Chase Liquid is a low-cost alternative to traditional checking accounts," said Ryan McInerney, CEO of consumer banking at Chase. By comparison a Chase Total Checking account costs $144 per year.

Chase is the latest entrant in a booming market for prepaids, which has emerged as a result of tighter regulations that limit banks' ability to charge higher fees in other areas. The prepaid market is not regulated in the same way. The cards are an increasingly attractive option for those turned off by higher bank fees or those unable to get traditional checking accounts.

With a price tag of less than $5 per month, the new Chase Liquid card is one of the more competitively priced cards on the market. But there is a growing number of cards with no monthly fee, including the Western Union Gold and MoneyWise cards, or American Express' Prepaid Card.

The big question for consumers considering a prepaid card may not be monthly fees -- but the ability to reload the card easily and without additional costs. Chase Liquid cardholders can put cash on the card at one of the bank's 5,500 branches or at one of Chase's 10,500 "deposit-friendly" ATMs for free. As comparison, Western Union has more than 46,000 locations where consumers can load cash onto prepaid cards for a fee, and payroll direct deposit is free. American Express prepaid cardholders can make direct deposits for free, but loading the card with cash from a vendor costs between between $4 to $5.

Currently, Chase Liquid is available at 200 branches in two markets as a pilot program. By the summer, it will be available at all 5,500 branches, according to the company's press release. Consumers must go to a Chase branch to get a card; withdrawing money from Chase ATMs is free, but getting money from an out-of-network ATM has a $2 fee.

Chase said earlier this year that customers who have less than $100,000 in deposits and investments were not helping the bank profit, and it has since made a push to focus on white-glove services for wealthy clients by expanding its Chase Private Client services.

But growth in the prepaid market was too good to pass up for the bank. Last year, consumers loaded more than $57 billion onto reloadable cards, a big jump from $19.5 billion in 2008, according to estimates by the Mercator Advisory Group, a market research firm. The figure is estimated to be $160 billion by 2014.

The Chase Liquid card has been in development for well over year, according to JP Morgan Chase spokesman Patrick Linehan.

Other mainstream financial institutions, have increasingly tested new services and products that typically have been offered by non-traditional financial groups, including short-term loans and prepaid cards. It is another way the biggest banks are trying to find new ways to make revenue lost from regulations on credit and debit cards.

Revenue at the biggest banks like JPMorgan Chase and Bank of America has been hurt by new regulations limiting the amount they can charge merchants each time a consumer swipes a debit card. But those same rules do not apply to prepaid debit cards, which means banks can get bigger returns on interchange fees from prepaid cards, according to Dow Jones.

Meanwhile, the prepaid industry overall has come under increasing scrutiny by consumer groups for the lack of consistent disclosures about fees, and the lack of compliance with certain regulations about protection of funds if the card is lost or stolen.

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Comments

[MSMSucksCom]

07:34 PM on 09/10/2012

By the way, Wells Fargo Bank also told me a year ago when I tried to change the card to working like a prepaid, meaning no money = the Visa charge does not go through, the CSR told me that "we don't have that feature."

What she was saying is that overdraft fees are still a lucrative business for WFB and so they will not do anything to cut into those profits.

So if I buy a $1 music download online, WFB will still approve the sale, but they will hit me with a $35 overdraft fee.

No thank you WFB. I have had it with your money grab practices.

Oh, and this has nothing to do with "the poor." AFAIK even middle income Americans don't like paying $100 to $1000 annually in overdraft fees, simply because they made accounting errors.

[MSMSucksCom]

07:27 PM on 09/10/2012

For now I am trying out my PayPal account as an alternative to using my Wells Fargo debit card that I have had for 18 years. I was using the WFB card for online purchases only. Once in awhile there were some automatic charges that went through (and I had forgot about).

End result is Wells on a $9 Netflix charge would ding me a $35 overdraft fee. (When I was dealing with my sister's passing I forgot to transfer money to cover the auto-payments for the month, so I got hit with about $180 in overdraft charges, for about $60 in automatic payments.)

When I called the bank they said that the new law that prohibits overdraft fees applies ONLY to use of the card as a debit card. Using it as a Mastercard or Visa for auto pay still subjects one to overdraft fees.

She took off three of the OD fees, but left the other three in place.

So I am canceling the account. (Which is short sighted of WFB since they got 4% of $50,000 in Visa transactions I ran through the card every year.)

[Jay Gould]

04:34 PM on 05/14/2012

Chase's new prepaid card is very good one and a worthy competitor to AmEx's prepaid card, which until now was the undisputed champion. American Express' card is still the better choice for everyone with a poor credit score who is cut off from the credit system, because it offers a path to a charge card and the opportunity to start building credit history again. Everyone else now has a choice between two very good prepaid cards. For more: http://blog.unibulmerchantservices.com/prepaid-cards-keep-getting-better.

[SaltyWench]

05:18 PM on 05/11/2012

The most telling statement: "Chase said earlier this year that customers who have less than $100,000 in deposits and investments were not helping the bank profit...". Banks used to help their customers profit - now it's the other way around.

Go with a credit union, if you can.

[Mummybadgers]

01:09 PM on 05/11/2012

Chase has had something like this for quite a while, but only offered it to employers as a payroll alternative to printing paychecks for employees that don't have a bank account for direct deposit.

[mamahappy]

10:24 AM on 05/11/2012

Being poor doesn't make one stupid. I sure hope people are smarter than buying this card. If one is smart they will go somewhere different with free checking or pay cash. Credit unions are good places for banking.

[jc007]

09:33 AM on 05/11/2012

my credit union doesn't charge me a dime for my checking account. in fact, i get a few cents every month in dividends. why? because credit unions are owned by their members.

[Phed Up]

11:46 AM on 05/10/2012

Hope Chase, BofA, Citi, Wells Fargo and all the big banks are hurting. What they did to our economy is disgusting. Now have everything at our local Credit Union. Couldn't be happier. Avoid the big banks and their schemes at all cost!

[bbgeez03]

09:46 AM on 05/10/2012

I don't understand. I have totally free checking with PNC, and it's a great account. No fees at all. I will say that I opened the account about 10 years ago, so I am not really in the loop on what banks are currently offering. And I do know others with PNC that have to pay small fees for their accounts. But is it really that difficult for people to find free checking accounts or very low cost accounts? And what about credit unions? Aren't their accounts really cheap or free?

[Zeroes]

05:16 AM on 05/10/2012

Predatory...Chase is out of touch.

[Telemachus]

02:06 AM on 05/10/2012

I could do that, or I could just carry some cash and NOT have to hand them a fiver every month.

Could somebody steal your cash? Maybe. But if they do, that's all they get -- not your name, credit history, etc.

[Telemachus]

01:59 AM on 05/10/2012

For those who can't wait to drown in debt ... "Liquid".

[Veri]

03:28 AM on 05/10/2012

And once enough customers are on the card, what is preventing Chase and the others to add fees? Nothing.

[salsero2009]

06:15 PM on 07/16/2012

and what's to keep you from opting out if they do, nothing

[breakingpoint]

12:51 AM on 05/10/2012

tellin's yas
guillotine

[Veri]

11:24 PM on 05/09/2012

"...Chase said earlier this year that customers who have less than $100,000 in deposits and investments were not helping the bank profit..."

Meaning, Chase customers with under $100k are a drag on their business - sheep to be fleeced with higher fees for poorer service. Time to leave. And the New America?

http://www.bradblog.com/?p=9280

Steal billions, get 40 months. Steal $100, get years.

[dtallwalk]

10:46 PM on 05/09/2012

You mean to tell me there are people who can't open a checking account in this country
unless you are here illegally and have no ID I could see where there may be a problem. If I had to I would just pay cash and not pay these dumb fees. to me one could be charged anywhere form 5 to 25 dollars each cycle
if you are poor this is a lot of money. WHY

[Kathryn Nichols]

10:03 AM on 05/10/2012

Actually, I am a citizen, born and raised in the midwest, and I can't get a checking account for two reasons: 1) My poor credit makes it likely that I will be turned down for a checking account, and the fact that a few years ago BofAscrewed my last checking account with out of order check proccesing, so I had a negative balance that took a year to clear up. I have been told by a couple of banks they won't do buisness with me. 2) Poor credit again, I have hospital bills that are still uncollected, I have been told by even the credit unions that I will probably be garnished if I set up an account. So, I use cash, and when I need to buy something online, etc, I charge my AMEX prepaid. Yes it costs me $5, but I don't ever carry a balance, and never have had a problem. Five bucks to make a purchace is cheaper than credit card rates......

[dtallwalk]

11:35 PM on 05/10/2012

Dude you can get a checking account your statements are full of things like probably
I am always amazed at how people in the US rely don't have any ideal how this country works. You can get a checking account there are law that make it very hard to get a your money. I owe doctor bills and no one is or can get my money
Unless I say it's ok or I fall for a bull shit line like you will go to jail if you don't pay this bill. I have had bill collectors hang up on me. My advice to you is read every thing And build a scence of how things in this country works get a Roth IRA and save

For your future. I am.

[salsero2009]

06:22 PM on 07/16/2012

for some people who have been turned down by banks due to Chex Systems credit check that banks use, this could be a better option than using a so called second chance bank checking account that charges higher fees