The long-awaited nationwide launch of the Chase Liquid card last week may not have seemed like such a big deal to the average consumer – after all, there are plenty of prepaid cards on the market already. What’s one more?
Industry experts however, are wondering if the new Chase reloadable card is just one more nail in the coffin for traditional checking accounts, which are on the decline and have been for several years. In 2001, checks were still the most common form of non-cash payments, but by2010, electronic payments made up 80 percent of all non-cash payments, according to research from the Federal Reserve.
Rich Oliver, Executive Vice President of the Federal Reserve Bank of Atlanta, said when those numbers were released that, “The payments industry has experienced a dramatic shift in check usage from 2001 through the end of the decade. The shift toward electronic noncash payment alternatives, along with electronic check processing, has been extraordinary.”
The Check (Isn’t) In the Mail
There was a time not so long ago when part of any basic high school business or home economics class taught kids how to fill out a check, including where to endorse it (don’t write below the line) and how to use the check register to balance your checkbook.
Today’s kids, however, have probably never heard their mothers say “hang on honey, I’m balancing the checkbook!” Since the advent of 24/7 online account access for virtually every type of checking account, and widespread internet access, it’s the rare person who still balances checkbook – or even uses checks at all. Workers have their checks deposited directly, people use credit or debit cards when shopping or dining out, and it’s easier all the time for retailers to accept electronic payments.
How is Liquid Different?
Though many prepaid cards carry the Visa or MasterCard logo, they aren’t sponsored by major banks. Many of them have high fees for loading the card, withdrawing cash, even checking the balance or getting help from customer service. Prepaid cards have a reputation as being a product targeted to two main groups of people: students whose parents are looking for an alternative to cash in order to give them an allowance, and the underbanked population, who can’t qualify for a checking account at all. Chase Liquid is the first prepaid card from a major bank that is known for offering basic checking accounts, and it’s marketed toward the everyday consumer who is fed up with checking account fees and ready to say goodbye to their checkbooks forever.
Better than Checking
In fact, the Chase Liquid card is remarkably similar to a basic checking account, and offers some advantages over Chase’s own checking accounts.
· The Chase Liquid card comes with a $4.95 monthly usage fee – a bargain next to the $12 per month charged for a Chase Total Checking account. Sure, you can avoid that $12 checking fee by keeping more than $1500 in your account at all times or making more than $500 in direct deposits each month – but if you can’t do those things every month, you’re out of luck.
· You can set up direct deposit with your Chase Liquid card, just as you would for a checking account – for no fee.
· ATM withdrawals from Chase’s extensive network of 17,500 ATMs are always free.
· You can transfer funds between Chase accounts and your Chase Liquid card – again, this is free.
· Receive a paper statement or an online one, call customer service 24/7, get text alerts, and replace lost cards – all for free.
“Chase Liquid is a low-cost alternative to traditional checking accounts and its convenience and pricing transparency sets a new standard for prepaid products. Customers can use Chase Liquid to make everyday purchases, pay bills and more, without any surprise charges,” said Ryan McInerney, CEO of Consumer Banking at Chase.
Are checking accounts, along with cash and credit cards, soon to be extinct? If checking accounts go the way of the dinosaur, Chase Liquid may be a contributing factor.