Chase’s prepaid debit card Liquid, unveiled back in May, is now available in the bank’s branches nationwide. The move is likely to put some pressure on existing prepaid providers since, in many respects, Liquid is the best of its breed. Here’s why.
Prepaid providers have long maintained their payment method is cheaper than traditional banking accounts for low income consumers unable to avoid monthly maintenance and, more notably, overdraft fees. This assertion has been hotly-contested by many industry experts who believe the other fees typically associated with many prepaid products – including activation, ATM, loading and customer service charges – deplete even more funds from cash-strapped cardholders.
What makes Chase’s product particularly noteworthy isn’t just its lack of miscellaneous fees (customers aren’t charged to activate the card, load money onto and refill it or call up customer service). Instead, it’s the fact that, when compared directly to Chase’s own basic checking account, the card is more cost-effective to those who would have a hard time meeting monthly balance minimums.
Chase’s Total Checking accountholders face a $12 monthly service fee if they don’t have $500 or more being directly deposited into the account or if they fail to maintain a minimum daily balance of $1,500 or an average daily balance of $5,000 or more in linked deposits of investments.
Comparatively, Liquid cardholders pay a $4.95 a month to use the card, which, for all intents and purposes, offers the same features as the bank’s checking account. Cardholders can withdraw funds for free at any of Chase’s numerous ATMs or branches. (ATM withdrawals are restricted to $500 a day.) They have access to online bill pay, can set up text message alerts regarding low balances and have certain liability protections in place to protect against fraudulent charges.
[Credit Cards: Research and compare prepaid debit cards at Credit.com]
Varying fee structures can make prepaid products notoriously difficult to compare. American Express, for instance, doesn’t charge a monthly fee on its basic prepaid product, but customers are only given one free ATM withdrawal each month (after which, they are charged $2 a piece) and have to pay $3.95 to $4.95 if they load the card using Vanilla’s Reload Network or Green Dot’s Money Pack.
Both Mango and Green Dot have higher monthly maintenance fees for their cards – $5 and $5.95 respectively – but both can be waived if cardholders meet certain load requirements each month.
Chase, incidentally, will also waive its monthly maintenance fee if you link the card to a traditional savings or checking account, but that seems like less of a value add for customers and more of way for the bank to capitalize on the higher merchant swipe fees associated with prepaid versus traditional debit cards.
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Still, regardless of side-by-side comparisons, the product is a good alternative for a customer who wants the backing of a major bank, but has struggled with the terms and conditions surrounding no-longer-free checking accounts. It will be interesting to see how prepaid providers respond to the added competition.
Image: Neubie, via Flickr