Chase launches new alternative to checking account


(AP) NEW YORK — JPMorgan Chase & Co. (JPM) has launched a prepaid card designed to be an alternative to a checking account as it tries to recoup fees it has lost under recent regulatory changes.

The company said Tuesday that the reloadable Chase Liquid card is available at 200 branches now, and will expand it to branches nationwide this summer. Chase said it the cards are being tested in two markets but declined to say where.

Banks are looking to prepaid cards and other new products to increase their revenue after regulatory changes have curbed the fees they collect.

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Consumers will pay a $4.95 monthly fee for Chase's reloadable card. They can use it the same way they do a debit card to make purchases and withdraw cash from ATMs and Chase branches. The company says it is a low-cost alternative to traditional checking accounts.

Rules went into effect in 2010 prohibited banks from enrolling customers in overdraft programs without their consent. Overdraft fees, which are often $35 or more per violation, were an important revenue stream for banks. Banks also took a hit last summer when new rules limited the fees that they can collect from merchants whenever customers pay with a debit card.

In response, banks have cut checking account rewards programs, introduced new accounts with higher fees and rolled out new products such as prepaid cards.

Chase said customers will need to have an initial $25 deposit to get the Liquid card but are not required to have a checking or savings account with the bank. There are no fees for withdrawals or customer service support, which it says sets it apart from other prepaid cards that tack on fees for those services.

"Chase Liquid is a low-cost alternative to traditional checking accounts, and its terms are clear and simple," Ryan McInerney, Chase's CEO of consumer banking, said in a statement. He said consumers could use the cards to pay bill and make purchases without "any surprise charges."

Prepaid cards typically target customers who keep low balances or don't qualify for checking accounts. People with a history of writing bad checks, for example, can have difficulty getting a checking account.

With prepaid cards, customers cannot write checks from the accounts or overdraw them, limiting the processing and other costs for the bank. Additionally, a loophole in the recent regulation allows banks to continue to collect higher fees from merchants when customers pay with a prepaid card versus the limits on fees when they use a debit card.

Shares of JPMorgan Chase & Co., based in New York, fell 40 cents, or 1 percent, to close at $41.38 Tuesday.