Amid the efforts made by banks to attract low-income customers, JPMorgan Chase JPM has started offering low-fee checkless accounts. The new account, called Secure, does not require any minimum balance and has access to the company’s mobile app, branches and ATMs for $4.95 a month. The news was first reported by Reuters.
Although these accounts are no-overdraft accounts, these come with debit cards, digital payments and free check cashing.
Moreover, these accounts charge $60 annually, which is significantly below the charge of $200-$500 per annum at check cashing and money order services.
In the past, banks generated significant revenues from overdraft fees. However, this was not favored by many customers and hence discouraged low-income people from using banks.
The chief executive of JPMorgan’s Consumer Banking unit, Thasunda Duckett stated, “The very first step in building financial health really starts with a bank account.” She opines that these accounts will most likely attract more individuals with low income.
JPMorgan is not the first bank to introduce such accounts. Similar accounts were offered by Bank of America BAC and Citigroup C. In fact, 16,000 ATMs and 5,000 branches in the United States that JPMorgan already has come second in line after Wells Fargo WFC.
Notably, unlike the prepaid debit card that JPMorgan has been offering since 2012 for $4.95 a month, this new account offers features like paying for car rentals and Uber taxi rides.
Duckett informed that while these accounts will make “some money", it will be less than what the bank generates through its other businesses.
Of late, regulators have been persuading banks to offer services that can attract low-income customers to use banks. In fact, banks have already built digital tools for well-off clients. And now, these services should be extended to low-income individuals to help remove poverty.
Over the past 12 months, shares of JPMorgan have lost 6.5% compared with 9.2% decline recorded by the industry.
Currently, the stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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