Chase’s Liquid offers a relatively straightforward fee schedule, which consists mostly of a monthly fee of about $5.

A quick rundown of Liquid’s fees:

$4.95 monthly fee

$5 for money orders or $8 for cashier checks (for making payments such as bills if a plastic payment card isn’t accepted)

Liquid offers the following for free:

Withdrawing or depositing money or checks at Chase ATMs or its branches

Checking your balance at Chase ATMs

Customer Service

Monthly Statements (either paper or online)

The Downside:

Liquid’s cardholders won’t be able to make online bill payments to those who don’t accept debit or credit card payments.  A number of other prepaid cards allow its cardholders to do so without a fee, such as the Walmart Money Card and the Approved Card.

Will Consumers Adopt Liquid prepaid?

One attractive feature about the Liquid prepaid card is that its users are able to deposit checks and money at Chase ATMs and branches without a fee.  For other prepaid cards, it typically costs UP TO $4.95 to put additional money, i.e. funds from a check, into a prepaid card account because they must use a reload pack EACH TIME.  The Liquid prepaid card can provide significant cost-savings for consumers who frequently have checks to deposit or do not have the option to have money directly deposited.  Which leads to the important question of whether there are conveniently located Chase ATMs and branches where their target audience, the underserved, live and work?

Will Chase’s Liquid Change the Underbanked and Unbanked’s View of Banks?

There have been numerous studies again and again about the underserved’s view of big banks, such as the New America Foundation’s March study, “We Don’t Do Banks.”  It seems that given the underserved’s unfavorable view of banks, and the additional negative attention toward big banks and their fees, it’s hard to know whether prepaid cards like Liquid will significantly change minds.

Will Liquid Keep It’s Current Fee Schedule?

Consumers may be attracted to Chase’s newest offering for its low fee, and apparent lack of additional fees apart from the monthly fee.  (The monthly fee, by the way, can be waived if the card is linked to certain Chase checking accounts).  Liquid is currently being offered as a pilot program and expected to roll out in 23 states by the end of the summer.  But will enough consumers sign up for the card?  Will Chase keep to it’s $5 monthly fee for Liquid, or will there be a reassessment of its fees due to a lower than expected adoption?

On the other hand, we have seen prepaid card fees drop, as found in our recent survey of prepaid cards, Prepaid Cards: Loaded with Fees, Weak on Protections.  Liquid prepaid may provide additional incentive for other prepaid card issuers to take another look at their fee schedules again.

And of course, it’s not hard to question the motives behind Liquid, particularly after comments about celebrating when checking accounts have $20 fees.   We certainly hope that Chase’s new prepaid offering aims to provide its customers with a low cost, well-designed product with high utility and does not become a second tier product to steer and shed its current unprofitable checking customers.  Until prepaid cards as a whole have guaranteed federal protections, they simply won’t be on par with debit cards tied to checking accounts.

What do you think about Liquid?

From the AP story:

The 52-45 vote to begin debating the legislation fell eight votes short of the 60 needed to proceed and stalled work on an effort both parties expect will ultimately produce a compromise, probably soon. For now, each side is happy to use the stalemate to snipe at the other with campaign-ready talking points while they are gridlocked over how to cover the $6 billion cost.

Republicans indicated that they supported efforts to extend the current cap on loan interest rates but filibustered the bill because they oppose they way it is funded.

It’s time for Congress to find a solution that can win bipartisan support. Lawmakers need to come together to craft a fair and reasonable funding mechanism that keeps the current rate cap in place.  Congress should invest in our future by extending the interest rate cap and help students afford the education they need to stay competitive in today’s tough economy.

At this point, it appears unlikely that either proposal would be able to win majority approval in both chambers of Congress. An estimated 7.5 million borrowers will face higher interest rates on new subsidized Stafford student loans beginning in July if Congress fails to come to an agreement on how to pay for the rate cap extension.  If interest rates double to 6.8 percent, the average student will owe thousands more in student loan debt.

Take a moment to email Congress. Tell them it is time to work together and prevent a college education from becoming more expensive!

Dear

Re: Support S2343, the Student Loan Interest Rate Hike Act of 2012

The Senate will soon vote on S. 2343, the Stop the Student Loan Interest Rate Hike Act of 2012. Consumers Union, the advocacy and policy arm of Consumer Reports®, strongly urges you to support this bill that will help millions of students and their families pay for a college education.

Student loans are necessary in order for most students and families to attend college at all.  The cost of tuition has increased by 559% since 1985, forcing more students and their families to turn to loans in order to finance higher education.  As a result, student loan debt now exceeds credit card debt, topping $1 trillion outstanding.

Subsidized Stafford loans are a very common type of federal loan.  According to recent data, subsidized Stafford loans made up 35%, or $40 billion, of the student loan market in the 2010-2011 school year alone.

The interest rate on federally subsidized Stafford loans is set to double from 3.4% to 6.8% for new loans starting July 1, 2012.  This means that the 7.5 million students who need loans to attend college will have to pay thousands more in student loan debt.  According to a recent study, two-thirds of college seniors in 2010 graduated with student loan debt, averaging $25,250. This debt makes it more difficult for graduates to stay competitive in today’s tough job market, impacting their career choices and ability to save for future investments.

In 2007, Congress approved the current 3.4% interest rate with bi-partisan support, and the College Cost Reduction and Access Act was later signed into law by President Bush.

We strongly urge you to support S. 2343 and invest in our future.

Sincerely,

Pamela Banks

Senior Policy Counsel

Washington D.C. Office

pbanks@consumer.org

Students and families in the U.S. are struggling to afford the skyrocketing costs of a college education, and are now forced to take out record amounts of student loans.

Unless Congress acts soon, subsidized Stafford student loan interest rates will double from 3.4% to 6.8% on July 1st, adding thousands in interest costs over the life of a loan.

Rising Costs Lead Students and Families to Turn to Loans to Pay for College.

• Americans now owe over $1 trillion in student loan debt, surpassing credit card debt for the first time
• The cost of tuition has increased over 500% since 1985, forcing more students and families to turn to student loans
• Student loan borrowers hold an average of $25,500 in student loan debt
• Two-thirds of all college students graduate with student loan debt

Doubling the Rate on Subsidized Stafford Loans Hurts Students Across the Country.

• 30% of all undergraduates took out subsidized Stafford loans in 2010-2011
• 7.4 million students will rely on subsidized Stafford Loans this year to help pay for college
• If the rate on subsidized Stafford loans doubles from 3.4% to 6.8%, students will pay an extra $1,000 on average per loan due to increased interest charges
• If a student takes out the allowed maximum of $23,000 in subsidized Stafford loans over four years of college, the rate increase will add almost $5,000 interest over the life of the loans combined

In this economy, the last thing Congress should do is make a college education more expensive. Time is running out; help us urge members of Congress to work together and pass legislation to keep interest rates where they are. For more information, visit DefendYourDollars.org.

April  24, 2012

Dear  Senator Shelby

Consumers Union, the advocacy and policy arm of Consumer Reports®, urges the Senate to take action to prevent interest rates from doubling on student loan borrowers starting July 1.  Keeping college affordable is not only good policy – it’s a nonpartisan issue.
 
The interest rate on subsidized Stafford loans is set to double from 3.4% to 6.8% for new loans starting July 1, 2012. This means that admitted students about to enroll in college, and current students about to sign up for new loans for the upcoming academic year, will have to pay thousands more going forward. Subsidized Stafford loans are a very common type of federal loan – according to recent data, subsidized Stafford loans made up 35% – or $40 billion – of the student loan market in the 2010-2011 school year alone.   The White House estimates that 7.4 million students across the country will be affected by the rate increase.
 
At present, loans are necessary in order for most students and families to attend college at all. The cost of tuition has increased  five-fold since 1985, forcing more students and their families to turn to loans in order to finance higher education. As a result, student loan debt now exceeds credit card debt, topping $1 trillion outstanding. According to recent estimates, two-thirds of all college students graduate with loans, averaging over $25,000 per student.
 
The current 3.4% interest rate was approved in 2007 with bipartisan support. Back in 2007, Congress passed the College Cost Reduction and Access Act with broad bipartisan support and it was signed into law by President Bush. It reduced the interest rates on subsidized Stafford loans incrementally over four academic years, from 6.8% to the current 3.4%.
 
Higher education in America is essential for economic opportunity and personal growth, as well as the social and economic prosperity of our country. We understand that legislation will be considered shortly in Congress to extend the current rate. We urge you to make higher education a priority this year and prevent interest rates on subsidized Stafford student loans from doubling this July.
 
If you any questions, please do not hesitate to contact us.

The Honorable Richard C. Shelby
United States Senate
304 Russell Senate Office Building
Washington, DC 20510-0103

April  24, 2012

Dear  Senator Shelby

Consumers Union, the advocacy and policy arm of Consumer Reports®, urges the Senate to take action to prevent interest rates from doubling on student loan borrowers starting July 1.  Keeping college affordable is not only good policy – it’s a nonpartisan issue.
 
The interest rate on subsidized Stafford loans is set to double from 3.4% to 6.8% for new loans starting July 1, 2012. This means that admitted students about to enroll in college, and current students about to sign up for new loans for the upcoming academic year, will have to pay thousands more going forward. Subsidized Stafford loans are a very common type of federal loan – according to recent data, subsidized Stafford loans made up 35% – or $40 billion – of the student loan market in the 2010-2011 school year alone.   The White House estimates that 7.4 million students across the country will be affected by the rate increase.
 
At present, loans are necessary in order for most students and families to attend college at all. The cost of tuition has increased  five-fold since 1985, forcing more students and their families to turn to loans in order to finance higher education. As a result, student loan debt now exceeds credit card debt, topping $1 trillion outstanding. According to recent estimates, two-thirds of all college students graduate with loans, averaging over $25,000 per student.
 
The current 3.4% interest rate was approved in 2007 with bipartisan support. Back in 2007, Congress passed the College Cost Reduction and Access Act with broad bipartisan support and it was signed into law by President Bush. It reduced the interest rates on subsidized Stafford loans incrementally over four academic years, from 6.8% to the current 3.4%.
 
Higher education in America is essential for economic opportunity and personal growth, as well as the social and economic prosperity of our country. We understand that legislation will be considered shortly in Congress to extend the current rate. We urge you to make higher education a priority this year and prevent interest rates on subsidized Stafford student loans from doubling this July.
 
If you any questions, please do not hesitate to contact us.

Sincerely,

Yesterday, Bloomberg News reported that many families are receiving confusing financial aid letters that lump in student loans with true financial “aid” such as grants and scholarships.  The format for financial aid letters varies by school, making them difficult to compare, and some students have little more than a month to decide. Loans and grants offered by the federal government are lumped together with the school’s scholarships, and the statements often don’t include information on interest rates.  Some letters may even list “suggested” financial aid options like risky and expensive private loans, which have fewer protections than federal student loans.

As tuition costs continue to skyrocket, it’s crucial that students and families can comparison shop before committing to a particular college  – and its financial aid plan. 

This month, the Consumer Financial Protection Bureau is introducing a new website that helps students compare financial aid options at different schools.   To test the site and offer comments, click here.

Students and their families are taking out loans in record numbers because the cost of college has skyrocketed, leaving those grads with loans that average $25,000 in debt before even trying to enter the job market.  Congress needs to act soon and extend a cap that has helped make the loans more affordable for millions of Americans.

While the bill is gaining bi-partisan support- both President Obama and Governor Romney support the extension- some in Congress are being stubborn and need to hear from their constituency. A vote is expected in the Senate in the coming weeks on legislation to keep the current interest rate of 3.4% in place.  The existing interest rate cap was enacted through bi-partisan legislation passed by Congress in 2007.

Take a moment and write to your Senator. Tell them your personal story or tell them about a family member or loved one who cannot afford to have the rate doubled. Then share your story with us.

WASHINGTON, D.C. – Interest rates on new subsidized Stafford student loans will double to 6.8 percent beginning in July unless Congress extends a cap that has helped make the loans more affordable for millions of Americans. Consumers Union, the policy and advocacy arm of Consumer Reports, urged lawmakers today to pass legislation to keep interest rates at their current 3.4 percent.

“Students and their parents are already struggling to keep up with the runaway costs of paying for college,” said Suzanne Martindale, staff attorney for Consumers Union. “Now is not the time to pile thousands of dollars in more debt on their backs by allowing student loan interest rates to double. Keeping interest rates low will help students afford the education they need to stay competitive in today’s tough job market. Congress should invest in our future and side with students and their families by extending the interest rate cap.”

A vote is expected in the Senate in the coming weeks on legislation to keep the current interest rate in place. The effort to extend the interest rate cap is supported by both President Barack Obama and Governor Mitt Romney. The existing interest rate cap was enacted through bi-partisan legislation passed by Congress in 2007.

An estimated 7.4 million borrowers will face higher interest rates on new subsidized Stafford student loans beginning in July if Congress fails to extend the cap on interest rates. If interest rates double to 6.8 percent, the average student will owe thousands more in student loan debt.

Two-thirds of all college students now graduate with student loan debt, compared to just one-third a decade ago. On average, these students graduate with $25,000 in debt. At over $1 trillion, student loan debt now tops what Americans owe on their credit cards.

Contact: Michael McCauley, 415-902-9537 (cell) or David Butler or Kara Kelber, 202-462-6262

“Schools should use federal taxpayer dollars to provide quality education for their students – to hire more teachers, provide career guidance, and help students find jobs,” said Ioana Rusu, regulatory counsel for Consumers Union. “But some for-profit schools with low graduation rates are spending big bucks on TV ads and hiring thousands of recruiters to pressure students into signing up for their programs. Those expenses shouldn’t be on the taxpayers’ tab, and that’s why Congress needs to pass this bill.”

The bill – the Protecting Financial Aid for Students and Taxpayers Act — would require all colleges and universities to pay for advertising, marketing and recruiting with non-taxpayer dollars.

The bill comes in the wake of an investigation of the for-profit higher education industry by the Senate Health, Education, Labor and Pensions (HELP) Committee. It found that 15 of the largest for-profit education companies received 86 percent of their revenues from federal student aid programs, such as the G.I. Bill and Pell grants. These for-profit education companies spent an average of 23 percent of their revenue on ads, recruiting, and other marketing tactics. By comparison, nonprofit colleges spent an average of only one-half of 1 percent of their revenues on marketing, the senators said.

The committee discovered some of these for-profit schools were using aggressive and deceptive recruiting campaigns to target students, especially active duty servicemen and women. At the same time, many of these schools had high dropout rates and low graduation rates when compared to nonprofit institutions.

Rusu said, “This bill is a big step forward in helping students, active military, veterans and their families. Schools need to focus federal dollars on helping students succeed, not bankrolling ad campaigns and hard-sell recruiting.”

Media Contact:
David Butler, dbutler@consumer.org, or Kara Kelber, kkelber@consumer.org, 202-462-6262

For our April Bank Alert we’d like to highlight a bank practice that can leave consumers owing hundreds of dollars in fees before they even knows what’s happening. No, we’re not talking about re-ordering transactions to drive up overdraft fees. Some banks reopen closed accounts if a debit or credit hits the closed account – against the express wishes of the consumer. Back in 2010, The Consumerist compared this practice to “the worst zombie movie ever,” and now these involuntarily reopened accounts are commonly known as zombie accounts.

A zombie account can be a fee-generating monster. It may start with an account opening fee or an overdraft fee. Costs then escalate with the imposition of a monthly maintenance fee, along with additional overdrafts and late payments as additional debits hit the account. The end result can be frightening. The Huffington Post profiled one unlucky consumer whose zombie account racked up $438.35 worth of fees in three days.

Sometime zombie accounts are the result of a bank mistake, but not always. It is Chase policy to reopen an account if a deposit is received, and Bank of America will do so if a deposit or debit hits the closed account.

Banks have no obligation to inform the consumer that the account has been reopened. That means that the first word a consumer gets may be when a statement for the closed account appears, listing the accumulated fees and outstanding balance.

There may be an uptick in zombie accounts on the horizon. According to Javelin research, 5.6 million Americans moved their money in final months of 2011. This fact, combined with the growing use of automatic debits and direct deposit, may leave more folks vulnerable to zombie account attacks.

To avoid this happening to you, make sure to ask your bank whether it is policy to reopen an account after your close it, in certain circumstance. Be clear about what those circumstances are. Do they only reopen when a deposit comes in, or when a debit posts? Can you opt out? If so, do that. Make sure to check all bank statements that come to you after you close an account. Most banks do not provide a written confirmation that your account has been closed. Instead they rely upon the final bank statement to convey account closure. Open all communications from a bank that your had previously! And if you don’t see a debit or credit post to your new account, find out if it went to your old bank.

Has your closed account been reopened by a bank you were trying to break-up with?  We’d like to hear from you! Email your story to money@consumer.org.