Chase Plans On Caring Even Less About Customers With Less Than $100K In The Bank

Are you a JPMorgan Chase customer with less than $100,000 dollars deposited? Then you are not making the bank enough money and it probably wants nothing to do with you going forward.

Speaking to investors today, Todd Maclin, the bank’s chief executive officer of consumer and business banking said that 70% of customers with deposits below that $100K line are not profitable for the bank after new regulations put a cap on lenders’ fees.

Thus, Chase intends to focus on making nice with the wealthy customers.

“Lost revenue has to be replaced with higher share of wallet and customer penetration,” Maclin explained. “You have to get your costs and where you spend your time, to the fullest extent possible, more in line with where the opportunity is.”

According to Bloomberg, Maclin described a “significant opportunity to deepen affluent relationships” and a “limited opportunity to deepen relationships” with us poor souls who don’t have six figures stashed away in the bank.

That being said, Maclin said will “celebrate” on the day it can charge $20/month just for having a checking account.

“When the world lets us charge something more akin to your gym membership or your card, we’ll be right there with them,” he told the investors. “In this environment, we’re just not going to rock that boat, and we have a brand and a franchise where we can make it up other ways over time.”

JPMorgan Clients With Under $100K Unprofitable [Bloomberg]

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  1. Ed says:

    Heh heh… he said “customer penetration.”

  2. AlteredBeast (blaming the OP one article at a time.) says:

    But a gym membership, you pay for a service. Doesn’t a bank leverage the collective funds in checking accounts to their financail benifit? (or am I totally wrong). It’s not like they get no benifit from holding on to someone’s money. THAT is their $20.

    • GrimJack says:

      Until the Fed stops lending money to banks at what is effectively a zero percent interest rate, banks aren’t interested in paying you interest on your deposits.

      • AlteredBeast (blaming the OP one article at a time.) says:

        I’m not talking about getting interest for our deposts. I’m saying, they collect interest by investing (or whatever) the collective funds. They collect the interest on my checking account, that is their fee.

      • Cor Aquilonis says:

        YOUR bank isn’t interested in paying interest on your deposits. MY bank pays me 3% on my no-fee checking account.

        2011 1099-INT: $98.
        2011 total fees: $0.

    • who? says:

      The service is that they’re holding your money, keeping track of it, sending statements, etc. They make money by loaning your money to other people, but at current rates of return, he’s saying that the break even point where the amount of money they make = the amount of money they spend is about $100k.

      Even with the really crappy interest rates right now, a $100k break even point seems excessive.

    • MikeTastic says:

      They do, but it’s not enough to cover the costs associated with unprofitable customers. Maintaining a branch/ATM network along with a safe online presence is not something that comes cheap. Additionally, banks legally have to keep a certain percentage of deposits available, so they cannot just use your deposits to trade for themselves.

      People seem to forget that this is not a new thing. Checking never used to be free. With the rise of debit card use in the past 15 or so years, the banks were able to subsidize the cost of maintaining checking accounts with transaction fees. Now that Dodd-Frank and the Volcker Rule have put a cap on those fees, the cost is getting transferred to the consumer.

      • ianmac47 says:

        Yes, but the more money they have in deposits, the greater their reserves are and larger their capital is. When banks say things like “we need fees to make a profit” what they really mean is they need fees to make bigger profits.

      • dolemite says:

        You act as if they make no money due to the lower fees. It’s that they grew so ACCUSTOMED to inflated profits, that they now feel they need to find ways to engorge themselves again on the same profits. Never mind that those profits occurred during a self-induced bubble.

        That’s fine. These guys want to cater to 100K+ crowd…that’s their choice. That’s why we have small banks and credit unions.

      • j2.718ff says:

        “People seem to forget that this is not a new thing. Checking never used to be free.”

        A bank would be hard-pressed to convince me that I should open a checking account if it wasn’t free. Here’s what I currently use my checking account for:

        1. It’s where my paycheck is deposited. I could switch that to savings instead.
        2. It’s how I pay my rent. I could use cash instead.
        3. It’s how I pay my credit card bills. There must be a way to do this without a checking account, right?

        • the Persistent Sound of Sensationalism says:

          I can’t remember the last time I lived in an apartment complex that accepted cash. It’s too big a liability for most companies. I understand what you’re saying though. I’m sure that a large part of their problem is the Fed keeping interest rates so incredibly low.

      • OutPastPluto says:

        If a check isn’t “free” then it’s a violation of basic banking rules.

        Perhaps Chase should have not built branches on every corner like McDonalds. It sucks to be bad at business in a competitive environment. Trying to invoke the “old days” is bogus since many of us remember patronizing less crass banks that were gobbled up by the likes of Chase.

        You really don’t have to be a total jerk to make it in this business. Although there are plenty of the 99% that will gladly make excuses for the worst kinds of corporate behavior.

        • CubeRat says:

          How is this a violation of basic banking rules?

          A checking account is a service. Yes, I understand you want a checking account without any fees associated with it, because you a kind enough to grant your business to a particular financial institution. That’s fine, I want that too. But not every financial institution wants to do business with every type of account holder. That is their option, and again I have no problem with it.

          There are hundreds, if not thousands of choices for consumers. If a business says, ‘we don’t plan to persue a business relationship with you, but we will open an account for you for XXX monthly fee’, I have a choice if I wish to persue the relationship and pay the fee. Welcome to capitalism.

    • zippy says:

      Banks make profits on the difference between what they pay depositors and what they charge borrowers. Since negative interest on deposits is pretty much a non-starter, when what they can charge to borrowers falls too far, small deposits start to become unprofitable, since the cost to service a small account versus a large account doesn’t scale.

      • Orrie says:

        I don’t know about you, buddy, but 39% APR on credit cards and mortgages out 40 years at 18+% for folks with a 720+ credit rating doesn’t sound like “what they can charge borrowers” has fallen “too far” in my estimation.

        The. Greed. Must. Stop. Society needs to be held together by something other than a system by which we fleece each other as hard as possible for as long and often as possible until it falls apart!

        • Firethorn says:

          You lost me when you mentioned 18% home loans. That’s what my credit card is! My home loan is 3.25%. My parent’s last home loan was ~7%. When they were buying their first home, loan rates were more like 14% for people with ‘good credit’.

          Meanwhile you have more defaulters than ever, so no, the banks aren’t making money off of small accounts. When I was a kid I got ‘free’ bank accounts on the basis that my parents had banks accounts there, or that as a college student they had a good chance of me becoming a big customer eventually. I see this becoming Chase’s problem. Most people don’t start off ‘rich’, they get there eventually. Drive off the small fry and the rich won’t beat a path to your door.

    • Jawaka says:

      I’m also confused about the comparison. For my gym membership fee I get access to equipment that I wouldn’t normally have access to. For my bank membership I get access to money that’s already mine. He really doesn’t see the difference?

      • jeb says:

        Access to that money from any ATM in the country, and for free if it’s a Chase ATM. The ability to send a piece of paper that works almost the same as cash (but with more safety) or pay your bills online. Being able to use a card to pay for things instead of having to carry a wad of cash around with you at all times.

        Things like that you don’t get by stuffing your money under a mattress.

  3. AustinTXProgrammer says:

    I have a Chase mortgage (through a broker, I didn’t pick them) and a Freedom card I pay off every month and a Checking account with a few hundred to accept iPhone deposits and Freedom card rewards. Otherwise I use a community bank and a credit union.

    I can’t imagine that Chase doesn’t make money from me though. Certainly not on my checking, but the Merchant fees from the credit card and my mortgage have to be profitable.

  4. Cat says:

    We bailed your ass out, Chase. I’d say that was pretty profitable, don’t you think? Fuck You, I don’t need you.

    • Southern says:

      Incorrect. Chase was forced to take the bailout money by the government. I don’t remember the stipulations but it was widely reported at the time.

      • Loias supports harsher punishments against corporations says:

        Take it or you fail?

      • Bor&Mitch says:

        Correct, all banks were forced to take bail out money, even if they were on solid footing like Chase. The rationale was that if the government only gave certain banks ‘capital injections’ the message would be that those banks are in danger of failing and that would sink them fast, Lehman style. So the fed basically told all the banks – you’ll take this money, and you’ll like it.

        • Southern says:

          NEW YORK – The chief executives of the country’s nine largest banks had no choice but to accept capital infusions from the Treasury Department in October, government documents released Wednesday have confirmed.

          Obtained and released by Judicial Watch, a nonpartisan educational foundation, the documents reveal “talking points” used by then-Treasury Secretary Henry Paulson during the Oct. 13 meeting between federal officials and the executives that stressed the investments would be required “in any circumstance,” whether the banks found them appealing or not.

          Paulson wanted healthy institutions that did not necessarily need capital to participate in the program first, to remove any stigma that might be associated with a bailout. He told reporters the intervention was “what we must do to restore confidence in our financial system.”

          ———————-

          So basically, many of the (larger) banks that didn’t even need the funds, where forced to take it under duress. Apparently this was their (the governments) way of getting their foot in the door of these banks, because by forcing them to take the money they could ALSO increase the scrutiny on these banks and force them to do other things, such as limiting compensation, bonuses, salaries, etc.

          All in all, a pretty shitting thing of our government to do. Put your blame in the right place. :)

    • incident_man says:

      +1 zillion. I just closed my Chase card account. I have a Costco Amex and a USAA Visa; I don’t need Chase.

  5. dwasifar says:

    What is $100,000 dollars? One hundred thousand dollars dollars? Is that different from $100,000?

    Maybe they’re looking not just for the wealthy, but for the redundantly wealthy. The 1% percent, perhaps.

  6. mister_roboto says:

    I thought they were the customer- you know, getting to hold all of my money and what not.

    Also: I need that tee shirt.

  7. Alan says:

    They probably about break even on me, I can’t remember the last time I paid a fee. I have my normal operation account that has about 1000 or less in it, and a credit card that always use and always pay off (got about 40 in rewards last month).

    They would of had a 2nd checking account with about 5,000 just sitting in it, but then they tried to charge me 6 bucks a month for the privlage.

  8. Michael Belisle says:

    Allow me to suggest a correction:

    Are you a JPMorgan Chase customer with less than $100,000 dollars deposited? Then you are costing the bank money and it probably wants nothing to do with you going forward.

    Because, you know, businesses like to eliminate unprofitable clients.

    • Cor Aquilonis says:

      I’m surprised that he’s actively eliminating cross-selling opportunities. I also doubt that Chase’s credit card operation is unprofitable, even with all those people with less than $100K in the bank.

  9. UberGeek says:

    So Chase pays 0.01% on a CD and collects up to 21.99% on their “Slate” credit card. That’s a margin of 21.98%. 21.98% of $100,000 is $21,980, or $1831.67 per month. If they need that kind of revenue to cover the costs, they have issues that $20/month for a checking account isn’t going to fix.

    • jeb says:

      “up to 21.99%”. Most of the time, their lending rate will be less than that. Plus, they’re not just loaning out lines of credit and credit cards. They’re doing mortgages, car loans, and other loans that have less of an interest rate.

      • UberGeek says:

        They can choose where to lend the money. If they don’t want the lower margin products, don’t sell them. Even so, the national average for a 30-year fixed mortgage last week was 3.87% (for someone with good credit, sub-prime extracts higher rates), which for a $100,000 account is $3870/year, or $322.50/month. The numbers are smaller but $20/month still won’t make a significant difference.

        Let’s take a look at a low-margin mortgage. Banks tend to originate a loan for a percentage or two and hike the rate a bit over the average, then either sell or collateralize the loan after a month or two, and service the loan for a cut of the interest (thereby dumping the risk off to 3rd-party investors). The boost in percentage tends to cover the discount rate for selling the note (meaning they quickly get their capital right back) and the servicing fee covers costs of actually servicing the loan. This leaves the origination fee is their gross profit. Yeah, there’s more to the equation, but let’s keep it simple. So they get a 1-2 percent profit on a deposit that can be recycled 6-9 times per year meaning a revenue of 6-18 percent — oddly similar to the prevailing rates for credit cards.

        I’m not saying they can’t make a profit, complaining about the fees/practices, or even telling them they can’t focus on the more-profitable clients. That’s all fair game. I’m merely calling bullshit in the concept that accounts less than $100k aren’t profitable.

    • NeverLetMeDown says:

      “So Chase pays 0.01% on a CD and collects up to 21.99% on their “Slate” credit card. That’s a margin of 21.98%. 21.98% of $100,000 is $21,980, or $1831.67 per month. If they need that kind of revenue to cover the costs, they have issues that $20/month for a checking account isn’t going to fix.”

      Yes, because those 21.99% loans have a zero default rate. If you’re borrowing at 21.99%, it’s because you don’t have another choice, which means you don’t have much financial flexibility, which means your default risk is high.

      • UberGeek says:

        So what is the default rate? Care to provide some estimates and calculations to back up your statement or are you just trolling?

        • NeverLetMeDown says:

          Sure. Default rates on credit card balances, IN TOTAL, have been running 5-10% annually (depends on the quarter, been closer to 5% the last few quarters). Clearly, the default rates for customers at very high interest rates, such as those described, are higher (since their credit quality is lower).

    • kaplanfx says:

      That’s a gross margin. There are costs associated with both the CD and the credit card that cause the net margin to shrink significantly from that, like branches, atms, corporate offices, staff, materials for billing etc., capital expenditures, mailing/shipping costs, and many many more.

      • UberGeek says:

        Sure there are, but they’re not directly tied to an account and aren’t enough to chew through that much margin. It will shrink the margin some, but not significantly. Chase turned a $19 billion profit in 2011, up 9% from the year before. Most companies I know would commit all sorts of crimes for an annualized, year-over-year profit increase of 9%. It would’ve been higher if it weren’t for losses in it’s investment arm in the 4th quarter (not the consumer arm, mind you).

        Again, I’m not saying they can’t turn a profit. Go out and make shit-tons of it. “I’m merely calling bullshit in the concept that accounts less than $100k aren’t profitable.”

        • jeb says:

          They’re indirectly related to an account, though. If there’s enough accounts lost, they can reduce the number of tellers, close a branch, remove an ATM location (because it no longer gets enough traffic to be needed), etc.

          One of the easiest (and relatively accurate) ways of measuring this out is by amortizing it across all accounts, or at least an average of all checking accounts. It doesn’t cost a ton more to have a $100,000 checking account than it does a $500 checking account (still need ATM services, bill pay, branches, etc. the same for both.)

  10. Coelacanth says:

    Let’s just ponder something … If I had $100k sitting around, why would I want to park those funds at Chase with the extremely uncompetitive savings / money market / CD rates they offer?

    One would lose a tremendous amount of money just due to inflation alone.

    I haven’t looked into their brokerage offerings, but something tells me they’re not very competitive for retail customers.

    • dolemite says:

      I’m trying to figure that out myself. If you have money, like 2k, or 5k, you can earn like .01% at a bank. If you have 100K you can earn like 1%. Who thinks this is a good idea? How do you have 100K in the first place if you think a 1% return is great?

    • MaytagRepairman says:

      I know what you mean. I’ve seen a few scared elderly people in my life who did keep their life savings (~$100,000) in laddered CDs at the local bank making nil because they did trust anything else, but those are the only people I can think of who would keep that much money in a bank account. There are better opportunities out there.

    • FatLynn says:

      If you want a better return, you have to sacrifice either liquidity or safety. If that 100K is your emergency fund, where would you put it besides a savings account?

      • OutPastPluto says:

        If you are getting no interest from the bank, you are better off stuffing it in your mattress.

        If you are worried about fire, then convert it into something fireproof.

        Either way, there’s really no point in giving it to the bank. They will not give you anything for it. You can’t hedge against inflation. In the worst case your money will become completely unavailable to you during a bank failure as your money will be stuck in limbo while the FDIC sorts things out.

        • jeb says:

          A bank gives me many advantages that stuffing it under my mattress in something fireproof doesn’t.

          For example, not having to carry wads of cash around with me. Debit card gets stolen? Report it stolen and have protection for most of my money. Being able to pay bills without physically visiting the branch (or sending cash through the mail). Things like that.

      • huadpe says:

        A savings account with better interest than what Chase offers? Their accounts have higher fees and lower interest rates than many competitors.

      • MaytagRepairman says:

        Back when interest rates weren’t in the gutter I found money market accounts at mutual fund companies paid better than ones found at banks. Now they don’t pay anything at all because there is nothing left for them to invest in that pays.

        In the current market, I would trade safety for a bond fund possibly one that invested primarily in I-bonds.

      • Cor Aquilonis says:

        I’ve seen a brokerage accounts used which invest in money market funds along with super-short-term high quality broadly diversified bond ETFs. While there’s no FDIC protection, there’s SIPC (not the same), and if someone needed money quickly, the funds could be sold at market and wired to a checking account on the same day (or same hour.)

        So, yeah, there’s a smidge less liquidity and a smidge more risk, but it’s an alternative to a savings account.

  11. APCO25guy says:

    as if you fellow working class folks need another reminder from these corporate asshole banks: PULL your money out and find a CREDIT UNION, where YOU are a shareholder.
    Fuck Chase, Fuck Bank of America, Wells Fargo, SunTrust, HSBC, fuck all of you and may you all contract every STD known to man.

    • Power Imbalance says:

      +1

    • UberGeek says:

      Are you giving them the STDs or trying to get one from fscking them all? ;)

    • NeverLetMeDown says:

      Your “working class” appeal is kind of funny, given that higher earners work a heck of a lot harder and longer than lower earners.

      http://www.nber.org/papers/w11895.pdf?new_window=1

      • wealhtheow says:

        “Your “working class” appeal is kind of funny, given that higher earners work a heck of a lot harder and longer than lower earners.”

        That paper shows a lot of things, but it never once claims that “higher earners work a heck of a lot harder” than lower earners.

        In regards to who works longer, it shows that hourly workers are less and less likely to get compensation for longer hours, so yeah, their hours worked per company have gone down. That doesn’t mean that hourly workers are working less long than salaried workers–plenty of hourly workers have multiple jobs, whereas I know no salaried people who do (though I’m sure they exist).

        Additionally, salaried workers aren’t all doing that well either. A decreasing proportion of salaried workers get a lot more for working longer hours, while for most salaried workers, just working 40 hours gets them less and less over time. “We find that two group characteristics — a rising level of within-group earnings inequality (at fixed hours) and a falling (or more slowly growing) level of mean earnings at ‚Äòstandard‚Äô (40) hours– are associated with increases in the share of workers usually supplying 50 or more hours per week”

        The authors also say:
        “Salaried workers did experience a real wage gain of about 4.5 percent between 1979 and 2006, most of which occurred in the 1990s. Hourly workers experienced an overall loss of 14.5 log points, consisting of a large decline in the 1980s followed by a rough constancy after that. Looking across quintiles of the wage distribution, all quintiles but the top one experienced a real wage decline in the 1980s, while all quintiles experienced gains in the 1990s. That said, as is well known, real wage increases in the 1990s were concentrated in the top of the wage
        18 As in all studies using CPS data, these hourly wages are directly reported by hourly paid workers, but calculated as the ratio of weekly earnings to hours for salaried workers
        distribution. Between 2000 and 2006 there were small wage gains in the top quintile and small declines in the bottom.”

        Hmm, wage gains for the very top and declines or stagnation for the rest? What does that remind me of….

  12. You Can Call Me Al(isa) says:

    “You have to get your costs and where you spend your time, to the fullest extent possible, more in line with where the opportunity is.”

    What?

  13. jeb says:

    What they’re probably failing to realize is that those “unprofitable customers” on the checking side may be very profitable if they have multiple services from Chase. For example, a customer may start with Chase checking, then maybe they need a credit card or car loan. Where will they look first? Chase.

    At least, that’s how it’s worked for me in the past with other banks. They’re my first point of reference for other banking services.

    • UberGeek says:

      I’m pretty much the opposite. I like to keep my assets separate from my debts. In the 80s, it hit my local news a few times how banks would raid checking (and savings?) accounts of customers when they fell behind on their mortgage. It would only apply if it was the same company servicing both accounts. I’m pretty sure that still holds true today. Of course I’m not planning on falling behind on my mortgage, but who does?

      I guess that means I’m at fault for this fiasco. ;o

      • huadpe says:

        They still do that. It’s called a dragnet clause, and it’s quite common, particularly for business accounts/loans.

  14. vastrightwing says:

    Good God. This guy is amazing. When you look at the relationship with the Federal Reserve Bank and how they get tax payer money, they don’t need retail account holders at all. It’s sort of like owning a laundry in order to justify transferring money around to clean it up. Basically he’s upset that government got caught with their hand in the cookie jar and now that they are reigning big banks in, he’s upset. OK with me. So it looks like we’ll see contraction in the banking industry for a while and higher fees. My mattress is looking pretty good these days.

  15. dush says:

    Banks are supposed to make money by using our money, not by charging us to use our money.

  16. Starrion says:

    Whoa.

    I didn’t realize I was being such a burden to Chase’s bottom line.

    I will close my accounts immediately.

    You’re Welcome.

  17. sirwired says:

    Makes sense… I was just thinking the other day why a large bank would bother with so much time and effort on the thankless low-margin task of retail deposit banking. There is nothing, or less than nothing, to be made off of the puny deposits. The manpower burden is simply huge in comparison with how much revenue, much less profit, can be extracted out of the accounts. The business also attracts a lot of regulatory scrutiny for such small rewards. (Retail credit is definitely WAY more lucrative than retail deposits.)

    While it’s possible to profitably run a retail banking operation, it’s not unreasonable for a bank to choose to accept deposits solely from business and private banking customers, and leave retail depositors to Credit Unions, who do almost nothing but retail banking.

    • Blueskylaw says:

      If I can’t make good money borrowing $100,000 from people and only paying them 0.1% then I have to be the stupidest person walking on the face of the earth.

      The reason they are doing this is not because they want profits, they want record profits quarter after quarter, year after year and decade after decade.

      JPMorgan Chase will go to their grave with clawmarks on their money while wishing for even more.

      • OutPastPluto says:

        What I don’t get is what’s supposed to be so burdensome about servicing a consumer checking account. Most of it should be automated and computerized. Even the “paper handling” parts should be largely if not completely automated. Who’s running things? Bender?

        They got used to living large. That’s all there is to it.

        • jeb says:

          The automation and computers running it aren’t free, though. Nor is the online checking or postage to send out those statements.

          And yes, you do amortize it across all checking accounts in order to compute the cost of the account.

      • sirwired says:

        A for-profit corporation wants to make more profit! Say it isn’t so!

        It’s not as if there are no retail banking alternatives if Chase kills consumer deposit banking. It’s a simple business decision, nothing more.

  18. Buckus says:

    There’s a logic problem here. You cannot possibly care less when you don’t care at all to begin with.

  19. scottydog says:

    It’s a pretty standard 80/20 situation. It applies in many corporations just like it applies to tax payers. 20% of your customers are responsible for 80% of your profits.

  20. gglockner says:

    And how many people with $100K or more in cash are keeping it at Chase?

    • Bsamm09 says:

      This is not only about deposits that the bank lends out. The source article says investment accounts too. That’s easy to believe. I have seen plenty of 1099’s from Chase this year with well over $100k in investment fees during 2011.

      Not a huge fan of their reporting though. For me, US Trust is the better deal. Fees seem smaller and their 1099’s are way more detailed which saves me time and client’s time also.

  21. smartmuffin says:

    “after new regulations put a cap on lenders’ fees”

    Surely nobody saw this coming!

  22. Sarek says:

    So Chase doesn’t want my business? I am deliriously happy to oblige them. (Yeah, I know, big talk from someone with no local JP Morgan Chase presence.)

  23. oldwiz65 says:

    If anyone doubted that Chase hates most customers..here’s the proof.

  24. Foil says:

    I’m glad that I moved my business from Chase to a credit union last year.

    • Press1forDialTone says:

      BRAVO! Foil. May the sweet bird of happiness always be flying near to you
      but not near enough to poop on you.

  25. Bor&Mitch says:

    The gist of the article is that unless you have 6 figures deposited, the bank doesn’t make enough putting your money to work in order to cover the cost of maintaining your account. And you do cost money. The thousands of ATMs and the network behind it, the account websites, the massive, redundant data centers across the country, the brick and mortar branches and the staff, the customer service lines, the debit card network, the checks, the deposit slips, the pens, the cleaning lady..this all cost money money money, If you’re the kind of person that barely keeps 4 figures in a deposit account, and you do no other business with the bank, you’re getting a bargain. And the bank desperately wants to dump you.

    • Blueskylaw says:

      If I can’t make good money borrowing $100,000 from people and only paying them 0.1% then I have to be the stupidest person walking on the face of the earth.

      The reason they are doing this is not because they want profits, they want record profits quarter after quarter, year after year and decade after decade.

      JPMorgan Chase will go to their grave with clawmarks on their money while wishing for even more.

      • SonicPhoenix says:

        How much money could you make if I loaned you $1000 at 0.1% but with the stipulation that you had to give some or all of it back to me whenever I wanted which would probably happen at least once a month? How profitable would that arrangement be to you?

        • UberGeek says:

          Quite a bit. You loan the bank at 0.1% but then they give you a credit card so you can borrow it back at 18%. Rinse, repeat (with a couple million customers).

          Plus, if you only have a grand in the bank, you are likely to have a lot more credit card debt than that. Even if they lose money servicing your $1000 account, it’s the equivalent of a loss leader. It may not work every time, but the odds are in the bank’s favor.

          • Bor&Mitch says:

            The article only talks about people with checking accounts, and suggests that people with low balances need to be cross-sold in order to become profitable. The assumption is that they don’t currently hold a credit card.

            People who basically use their checking account as a way to pay monthly bills (i.e. keeping no reserve) and have no other products with the bank are big time money losers.

          • voogru says:

            You have to account for defaults, that eats into that 18% figure.

      • NeverLetMeDown says:

        “The reason they are doing this is not because they want profits, they want record profits quarter after quarter, year after year and decade after decade.”

        Yes, absolutely, as does every company, and as does every individual. Unless, of course, you want to tell your boss “no, don’t give me a raise, I’m happy making what I make today, forever, without ever seeing it go up.”

    • psm321 says:

      So would they maintain fewer branches and ATMs if they only had wealthy customers? And if they did that, could they keep the wealthy customers?

    • SlimDan22 says:

      Banking companies usually don’t have there own datacenters for transactions they usually have a separate company do that for them. If they do run them it is usually registered as a separate company and they also provide transaction processing for businesses which they make huge profits off of. I believe Chase has there Chase Paymenttech subsidy. It literally costs pennys to send a transaction, it also costs more to send and process a check.

  26. Blueskylaw says:

    I have a great idea for banks to save/make money – just get rid of all customers with a checking account and revel in all the savings that will come from it.

    Problem is, they would probably go bankrupt if they lost all their checking account holders because they actually make the bank good money. Technically an account might cost the bank money but they never tell you about all the other benefits associated with having customers with low checking balances. You will also never hear them mention the money multiplier.

  27. lovemypets00 - You'll need to forgive me, my social filter has cracked. says:

    Wow – Chase will truly become the bank of the 1%. But don’t worry, that $100,000 will be reduced pretty quickly with reordered debits and credits, fees, etc. Because when all the little unprofitable people leave, someone has to pick up the fees.

    I hope they don’t cancel my Chase Freedom card. I use it for rewards, and pay in full before the due date. I should end the year with about $400 in rewards, $200 just for signing up for the card. I’m using rewards to fund my new TV.

  28. erratapage says:

    Sure… you can use my money, and I’ll pay you $20 a month. Not. If credit unions (not to mention my existing bank) can afford to offer me free checking, then Chase can too. I don’t believe a thing these morons say.

  29. esc27 says:

    Of course the bank needs to make money. I just wonder what percentage of its expenses are mandatory (e.g. buildings, networks, etc.) and what percentage goes to things like corporate retreats in Hawaii, billion dollar CEO raises, etc. My guess is that basic checking accounts would be much closer to breaking even if they weren’t expected to subsidize excessive spending.

  30. Awesome McAwesomeness says:

    Maybe all of those people should just withdraw their money from Chase and they can exactly what happens when every single person with less than $100,000 in the bank closes their account. It wouldn’t be a pretty sight for Chase.

  31. DENelson83 says:

    Notice that only the first $100,000 you deposit in the bank is FDIC insured.

    Co-incidence?

    • Bsamm09 says:

      Nope because it isn’t $100k, it is $250k. Also this accounts for stock accounts too which are different.

      • UberGeek says:

        Yeah, that went up awhile back but is currently slated to drop back down at the end of this year. It covers “$250,000 per depositor, per insured bank, for each account ownership category” (which typically does not include investment accounts). That means you could be covered for more than that if your money is spread out in different types of accounts.

        I found something out recently that plays into this a little. The 0.1% (or even 0.01%) is actually a drawback. FDIC states “deposits held in noninterest-bearing transaction accounts will be fully insured regardless of the amount in the account.” Of course, that’s not a problem I’m going to run into anytime soon…

  32. CubeRat says:

    It appears from the many comments, that few of you (and this includes Chris Morran) read the article. Chase plans to focus on persuit of customers with over 100k in investible funds, because these individuals usually have more complex relationships and Chase can make a lot more money off them. Cool, go for it.

    For most of us, a checking, savings, maybe a loan, or credit card, or IRA. This is where the community banks, small banks, credit unions excel. This is who they persue. When you start having all those, and maybe a mortgage, or an investment account, you are one of those customers that a regional or large bank may start to persue. I like not having to compete with the Todd Maclins of the world for my banking needs. I admit I have a Chase afinity credit card, but no other relationship with them. I do my real banking elsewhere, and ignore all their attempts to woo me. (They really don’t want me anyway, I don’t have 100k.)

  33. D007H says:

    Does this mean they’ll stop running those asinine commercials with the rock music theme on tv? I jumped ship from Chase over a year ago because there was no longer free checking for ex-Wamu customers. Unfortunately, I signed up with an equally craptastic credit union. What other choice is there, keep my money under the mattress?

  34. jimstoic says:

    Why are they constantly trying to get me to open a checking account with them?

  35. Nick says:

    Todd Maclin is a liar.

  36. voogru says:

    You have the patriot act to blame for this.

    It costs banks money to spy on everyone to make sure they’re not terrorists.

  37. There's room to move as a fry cook says:

    On Monday I sat down and talked with a Chase Manager and an Asst. Manager about reversing an overdraft (they put items through largest to smallest) .. and was successful. On Wednesday I said Hi to both when I was in the bank and but neither showed even the slimmest glimmer of recognition.

  38. ancientone567 says:

    Hell, I have had a great 2000- Gardall Safe for years and I don’t need a bank for shit. The extra 1000- was for a better digital lock. http://www.safeandlockstore.com/product_images/o/467/1812-2-G-C_OPEN__26215_zoom.jpg

  39. Press1forDialTone says:

    Good folks of Consumerist.com:

    As many including myself have said,

    GET YOURSELF TO A CREDIT UNION NOW!

    Leave the big banks to battle over the affluent

    who won’t get by with the shit they do like we do.

    That will -decrease- all of their customer bases

    and they will tear each others eyes out competing

    over who can suck up to the rich (they are delicious

    if case you want to cook an unconscious one up on

    the grill on a Saturday). It will end up devastating their

    bottom line as do most short-sighted decisions in

    business, and we won’t be there to charge fees to

    to help them “pick up the slack” by penetrating us.

    Where are all the activist consumers? Is whining the

    only thing consumers do these days? Activism is the

    -only- way to change anything in the world that is just

    wrong.

    • AldisCabango says:

      Credit Unions are not always tthe best option. One should take the time to investigate their options and pick the best for their own individual needs, be it a bank or a credit union.

  40. BooCackles says:

    Good- now maybe the manager at the Chase (that is in the Kroger I shop at) will leave me alone…he kept trying to sell me products I didn’t want or need. Being broke has it’s perks!

  41. final_atom says:

    chase would change its tone in an instant if that unprofitable 70% took its money else where.

  42. eezy-peezy says:

    My small local bank used to put on a killer holiday party every year – after hours, open bar, catered. Two years ago they decided it would just be for members of the Golden whatever club – meaning over 100,000 in assets in the bank. Somehow I did not get an invitation…..

  43. zibby says:

    If you’ve got the “$” before the amount, you needn’t say “dollars” after.

  44. SmokeyBacon says:

    Wait wait wait – I don’t get this at all. I have a Chase visa and I cannot tell you how hard they are working to try to get me to open a checking account with them. And there is no WAY I would have even close to that amount in my checking account, and they must know that because I haven’t had the credit card that long (I got it with them because of the 0% interest for 15 months – had to get my breaks fixed and knew I could pay it off in that time even though there was no way I could do the whole thing as a lump sum – normally I would have just saved for the purchase and then made it, but you know, it was the breaks so that wouldn’t work this time – and yes I know I should have had the money in savings, but unfortunately this isn’t the first car issue to come up recently – don’t lecture me). Every time I log in to my account I get a “switch to us for checking and get X dollars” deal – and they have started mailing them to me too, with an extended time period for it. I am considering it because the account had no fee if you have 500/month in direct deposits, but reading this makes me think that maybe I need to do a bit more considering.

  45. kataisa says:

    The Big Banks are crying wolf. Every couple of months we read about all the fabulous bonuses they get because business for them is so wonderful. They’re making do with $3 billion in profit instead of $6 billion. Hard knock life, these bankers.

  46. Spaghettius! says:

    Part of me is saying “WTF? I’m closing my account and walking to the nearest credit union!” and another part of me is saying, “My account is hurting their profits? F*ck those bastards, I’m signing on for life, paying everything on time, and disputing fees forever. Muahahaha”

  47. SlimDan22 says:

    I thought this advertising was pretty funny, its for City National Bank which was bought by Bank One then it was absorbed by JP Morgan Chase
    http://www.youtube.com/watch?v=NbFF2S61kjw

    • UberGeek says:

      Ahhhh, the golden era of advertising. I used to frequent a bank that looked like that inside. Very friendly, got to know you (even before you went begging for money). I got my first checking account there at 16. Nine years later I got my first car loan there and the lender said, “Oh, you’re (so-and-so’s) son. Have a seat.” It’s too bad I had to leave them when I moved out of state.

  48. ChilisServer says:

    My husband and I have two joint and two savings accounts with Chase in addition to our business checking/savings. We also have three Chase credit cards and two Chase student loans between us – the loans were from the year before the feds said banks couldn’t do that anymore.

    We certainly don’t have $100,000 in the bank, so if they feel like we’re not worthy customers I guess I’ll move to USAA and a credit union for my needs. I can’t transfer the student loans, but we can change our checking/savings/credit cards in a pinch.

    If you don’t like us so much, we’ll gladly take our business elsewhere. And good riddance.

  49. Wench86 says:

    Another reason to switch to a credit union….

  50. nikalseyn says:

    You can thank your friendly imperial government for all the charges you will pay to banks. Best bet: go to a credit union.

  51. Tacojelly says:

    Don’t worry, you will soon be relieved of my business