By Willy Staley  Posted on Wed May 9, 2012

Chase Launches Liquid, Its First Prepaid Card

 

Chase announced Tuesday it will launch a prepaid card, its first ever. The card is called the Chase Liquid, and comes with a simple fee structure. Chase joins American Express, Regions and BBVA, as another established financial services provider moving into the prepaid space.

The Liquid card costs just $4.95 a month to use and has virtually no other fees. Aside from the $25 initial deposit, it costs nothing to open a Liquid card. Also, it costs nothing to load — and unlike other prepaid cards, you can use Chase’s ATMs to load cash or checks directly onto the card. The Liquid card can also linked to direct deposit.

This is a massive advantage over other prepaid cards, which are typically loaded through Green Dot MoneyPaks, or other fee-laden services.

The fees that do come with Liquid are fair. Chase charges $2 for non-Chase ATM purchases, and that’s about it. If you wish to send a money order or get a cashier’s check, there are fees for those services ($5 and $8, respectively) but the card keeps things free otherwise. In fact, the $4.95 monthly fee is even waived for those who connect their prepaid card to a Chase checking account — but who would?

Currently the Liquid card is available only in two test markets, but Chase will not disclose which. It will be available nationwide at some point in the summer, at a date which Chase will not disclose. Once the card launches nationwide, it will have full mobile and online capabilities, too, according to a spokesperson. This means that Liquid customers will be able to load their cards using mobile deposit, and even do P2P payments with their account — pretty great.

In recent months, banks have begun rolling out their own prepaid products. Regions Bank has one, and so does BBVA Compass. Even American Express, which typically deals only with prime credit customers, has one. As Chase joins this group, it seems likely that soon the prepaid market will be dominated by banks, instead of the nonbank companies that first ventured into the market. This is good news for consumers because many nonbanks charged exorbitant fees.

The more this happens, the better the odds are that the un- and underbanked can be brought back into the mainstream of the financial system — which, like it or not, is the most reliable way to grow one’s wealth. American Express, for example, helps some prepaid customers “graduate” to a charge card if they demonstrate their responsibility with the prepaid card. Will Chase do the same?

From a Chase spokesperson: “We will look at usage patterns for Chase Liquid customers to understand customer behavior and to see if this product is still the best fit for them.  Over time, it may make sense for a customer to use a different product that meets their needs.”

So, maybe. At least they’ll be able to use the card as a full checking account replacement, something banks have struggled with offering since the Durbin Amendment cut into debit interchange revenue. Subsequent fees on formerly free checking accounts have made them unattractive to some. Chase’s Total Checking, for example, has a $12 monthly fee. The Liquid card will work much better for someone unwilling or unable to afford the Total account, but who wants the convenience of a Chase account.

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