Chase’s Fee-Churning Plan for SSI Recipients

JP Morgan Chase has created a fee schedule for its Chase Total Checking Account (“CTCA”) that systematically pulls dollars out of the pockets of retired Americans.

The Chase Total Checking Account charges a monthly fee to any account holder that fails to make a single direct deposit of at least $500 per month. The CTCA fee can be avoided if you maintain a daily minimum balance of $1,500, or if you have an average balance of $2,500, or if you have $5,000 in any combination of Chase accounts worth a combined sum of $5,000.

If the account holder can’t meet those hurdles, then Chase takes $12 from the account. This in an excerpt from the fee schedule:

• Have at least one direct deposit of $500  or more made to this account. The  direct deposit, which must be an ACH  credit, may include a payroll, pension,  or government benefit payment such as  Social Security. Two or more smaller  direct deposits that add up to $500 or  more do not qualify;  or
• Keep a minimum daily balance of  $1,500 or more in this account; or
• Have an average daily balance of  $5,000 or more in this account or a  combination of this account and any  deposit or investment  accounts linked  with this account; or
• Have paid $25 or more in qualifying   checking-related services or fees.

Since February 8th, 2011, these rules have applied to everyone that has a CTCA.

I am worried about the In millions of households, Social Security is the only source of income. Combined payments from Social Security Disability Insurance (SSDI) or Supplementary Security Income (SSI) don’t represent a lot of money. These are low-income people.

The problem for them is that a sizable portion of these households never receive a check for $500. Many get more than that over the course of the month, but they never get on check for more than $500. The asset problem is a factor, too. 8.8 million SSI recipients have less than $2,000 in assets.

The 2010 Annual Social Security Statistical Supplement reports that 11.7 percent of its recipients never get a check for more than $500. In fact, the average monthly check for SSI-only individual recipients is $497.60. That means that Chase charges those individuals $12 per month for a shortage of just $2.40. Things are even worse for older Americans. The average monthly check for SSI-only recipients over age 65 is $402.80.

The government mails small checks to plenty of people. Temporary Aid for Needy Families (TANF) checks are often less than $500. Those households must meet an asset test, too. They can’t get TANF if they have more than $1,000 in assets.

That doesn’t seem to concern the folks at Chase. It could be that retirement security isn’t a concern at JPM. Chase paid its 200,000 employees $26.9 billion in 2009 – a sum that could come to as much as $134,500 per worker. Social Security doesn’t tax wages beyond $106,000. In other words, the average Chase worker pays less, on a per dollar basis, than most Americans.

Eric Young, a 47-year old Chicagoan that gets one SSDI check for $344 and a SSI check for $353, finally said something about it. He contacted a local advocacy group. Young’s SSA direct deposit has been going into his CTCA every month. Unfortunately, those are the only checks that Mr. Young gets.

Chase responded to his individual case by offering some advice to Mr. Young: get SSA to change how they do business.

On a broader policy level, they use obfuscations to justify their position. There is a free market logic to their position – customers can go to another bank if they want to.

Where's Waldo: Find the neighborhood bank in this Southside Chicago community.

Unfortunately, Chase is buying banks left and right. Most Chicagoans get can to a B of A if they want. Still, many parts of the South and Near West areas in Chicago are underbanked. The Community Reinvestment Act might address that, if it was enforced.  In fact, if you live in parts of the near West side of Chicago, the nearest Chase branch can be about 14 blocks away.  These consumers don’t have to use a branch. In that case, those same near West-side areas are within 10 blocks of an ATM.