Tips, News and Advice from Credit Card Assist

Avoid the New Chase Liquid Prepaid Debit Card

by on August 10, 2012

Recently, Business Insider gave a glowing review to Chase’s new prepaid debit card, the Liquid. Unfortunately, it seems that Business Insider is easily impressed. While the site concludes that the Liquid “actually looks like a decent product,” we got our hands on the card’s terms and conditions and came away with a completely different impression. After reviewing the card for ourselves we can confidently say that the Liquid prepaid debit card is anything but “decent.” In fact, it’s pretty terrible. Here’s why.

Like the Suze Orman prepaid card, it’s not clear what purpose the Liquid prepaid debit card serves. Unlike a regular debit card, prepaid debit cards aren’t associated with any particular bank account. Instead, cardholders have to load their own funds on the card electronically or through an ATM before they can buy anything. This makes the card function like a checking account, only without any of the benefits of a checking account, like the ability to write checks. And that’s not even the worst thing about the card.

The worst thing about the Liquid card is that while the benefits of an online checking account may be missing, all of the fees that banks like Chase love to charge are there en masse. To use the Liquid card, customers have to pay a $4.95 monthly service fee. Additionally, they’ll also have to pay $2 for using a non-Chase ATM to add or withdraw cash.

To be fair, this isn’t as bad as the bevy of fees that other cards charge for arbitrary things like receiving account alerts, withdrawing any money whatsoever or failing to meet minimum monthly deposit requirements. However, the fundamental problem is still there. And considering the tricks Chase has been up to recently, that sweet freedom from fees the Liquid offers isn’t guaranteed to last.

You might recall that earlier this year Chase attempted to charge checking account customers a $3 monthly fee for using a debit card. Though the move was nixed due to a ferocious customer backlash, it’s not ridiculous to suggest that Chase will eventually try to bump up the fees on the Liquid as well.

This is especially true when you consider the primary demographic Chase is appealing to here. Like every other prepaid card issuer, the bank is using the Liquid to go after America’s 17 million un-banked and under-banked citizens. These people tend to be undereducated as far as good financial practices are concerned, and they often have poor or no credit ratings. Consequently, they tend to see prepaid debit cards as the easiest or only way to get a piece of plastic in their wallet.

Unfortunately, most banks see this crisis as a business opportunity rather than a chance to do something genuinely useful. Instead of creating specialty credit cards and easily accessible checking accounts, they push these prepaid cards that do nothing but extract fees from unwitting customers. So, going to back to Business Insider’s review: is the Liquid card a decent product? Hardly. It’s less toxic than other prepaid debit cards, but it’s just as useless in the long term.

If you’re considering signing up for a prepaid debit card, we strongly recommend opening a checking account at a local bank instead. It’s a safer way to manage your money, and the bank will be happy to provide you with a debit card that can do everything the Liquid card does and more.

And if you’re attempting to rebuild your credit rating, we’d like to remind you that prepaid debit cards do not report to the credit monitoring bureaus. The only way to improve that three-digit number is to get a legitimate credit card, like the Capital One Secured card, that will monitor your spending.

Getting your finances in order isn’t easy, but it is possible, even for someone with terrible credit and a ton of debt. However, prepaid debit cards aren’t the way to do it, and we don’t believe that they ever will be.

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{ 5 comments… read them below or add one }

Sean H August 12, 2012 at 8:05 pm

This article seems more like a comparison between checking accounts and prepaid debit cards, rather than an explanation as to why we should "Avoid the New Chase Liquid Prepaid Debit Card." To make your argument fair, you would need to compare the Liquid card to other prepaid debit cards that are out there because the alleged disadvantages you've listed (monthly fee) are common among nearly all the prepaid cards. OK yes, for those who tend to be more financially savvy, a checking account is undoubtedly the best option. But to argue the Liquid card is no good because it has a monthly fee unlike a checking account is pointless because each is targeted at different markets.

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ross August 25, 2012 at 2:26 pm

Stop your whinning,this is the best pre=paid card Ive ever seen,at least you can put money on your card thue any chase Atm machine and theres alot of chase atms out ther.Most pre=paid cards charge you to put money on your accouunt,

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John Mann September 29, 2012 at 8:22 pm

I disagree with this article. I love my new Chase Liquid card. Other than the low monthly fee (lowest I've seen) – there are no fees to load money, withdraw money and you can even deposit checks at the ATM or by Chase Mobile. As long as you use a Chase ATM, there are no ATM fees. Chase is everywhere – even every Duane Read has one now in NYC. I don't know about other areas.

The only thing I wish is that they has online bill pay so I could send a check online to my landlord or other places that don't take cards. My AccountNow card has this feature – but costs me at least $30/month in fees like $4.00 every time I load the card and up to $6 to withdraw money between the 2 ATM Fees. Nothing's perfect – but if you don't have access to a regular checking account or don't want one – this is the best card I have seen.

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Jean January 4, 2013 at 4:42 pm

I strongly agree with this article , the liquid is a terrible product. The catch is “check” deposits , these deposits are sucked up by the bank at their descretion. Sometimes withholding funds for undefined amount of time. Futhermore they allow third party checks, which fall under scruteny and can resuld in frozen and closed account. JpMorgan Chase, is a first class financial Monster. They provide a service to themselfs, they pray on the dissadvantaged. Chase is the epidamy of corporate greed.

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Lynne C. Spencer March 26, 2013 at 6:00 pm

I am avoiding the liquid prepaid debit card as it is not advantageous to my financial state. Plus I feel that this model will not prosper.

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