Investment Goliath JP Morgan is set to challenge British banks on home ground as it makes its first foray in the retail banking sector outside of the US with it’s new Chase bank account. The digital only account will of course draw comparisons to Starling and Monzo, but this is no ordinary challenger. As the account prepares to launch, we take a look at how it stacks up against the competition.
What is Chase?
Chase is investment bank JP Morgan’s consumer brand. Whilst it may be new to the UK, it’s not a challenger bank as you’ve seen them before. Chase is one of the oldest and largest banks in the US already serving some 60 million households. With more than $4 trillion of assets under its management, and valuation of over $450bn, this new entrant to the UK market is already worth more than Barclays, Lloyds, HSBC, and Natwest combined.
Unlike the US where it has 4,700 branches Chase’s UK bank account is a completely digital offering similar to that of leading challengers Monzo and Starling.
How do I get a Chase bank account?
At present the account is available on an invitation only basis, but you can join the waiting list on Chase’s website. It should be open all by November.
You must be over 18 years old to apply, and must be tax resident in the UK.
What are the key features and benefits?
The UK banking sector is one of the most mature and competitive in the world. Not only is Chase hoping to compete with the big highstreet banks such as Barclays, HSBC, Lloyds etc… it’s also going up against successful digital challengers such as Monzo, Starling, and Revolut. In order to win over consumers the Chase account is offering a range of benefits:
1% Cashback on purchases
Cashback accounts aren’t new, the Chase account offers this 1% on a wider variety of every day spending than we’ve typically seen in the past.
Santander’s popular 1-2-3 account for example offers 1-3% on bill payments only, others such as Natwest, Co-op, and Barclay’s are linked to specific actions. Chase’s offer isn’t without it’s caveats, but these seems to be based around vehicles, tax and cash, seemingly as a way to prevent combining the offer with any other rewards.
Unfortunately the 1% cash back offer only lasts for the first 12 months, and at present it is unclear if spending abroad is included.
5% AER interest on ’rounded-up’ savings
At a time when most banks are offering pitifully low interest rates, Chase is offering 5% interest on savings. The catch here is that it only applies to round-ups. If activated all spending on your account will be rounded up the nearest pound. That money will then be moved to separate ‘pot’ where it will earn 5% interest.
As an example if you pay £6.55 for your lunch, Chase will round this up to £7, with the 45p difference being held in a ‘savings pot’. 5% AER variable interest is then added on the amounts held in the savings pot. It is calculated daily, and paid monthly. After 12 months all of the money in the saving pot is moved to your main account.
There is currently no time limit on this feature, but with the rate being variable it is likely that it will be reduced after the first year.
Fee free foreign spending
Like Starling and Monzo, Chase is offering fee free foreign spending, so there won’t be any charges for making purchase or withdrawals whilst abroad. This is something we’ve come to expect from digital challengers, so whilst it isn’t anything new, it is still very welcome.
The full details of this offer haven’t yet been released, we assume there will be a cash withdrawal limit similar to Monzo and Revolut but these haven’t been announced. As such we’ll hold off adding the Chase account to our list of top travel cards for now.
No ATM fees in US
This is something of an add-on to the above. Whilst many banks offer fee free foreign spending, foreign ATMs can charge for withdrawals. Santander machines in Spain are terrible for this often charging up to €5 a time. The situation is similar in the US. Practically all ATMs charge a fee for withdrawals unless it is run by same bank as your card. The Chase account card can be used at Chase operated ATM’s in the US without any withdrawal fees. That is something even Santander couldn’t manage when the UK was in the EU.
Advanced budgeting? (separate pots = separate accounts)
Want to keep your income and expenditure separate? This was one of the most popular features of the Monzo account, and something that many switching to Starling had request. Chase takes the concept pots, a place where you can separate money from your main account, one further by essentially allowing you to create up to 20 current accounts all linked to the same card. Each account will have it’s own account number to be able to send and received payments. You can then be use your Chase debit card to spend from the account of your choice by selecting it from within the app.
What are the Drawbacks and limitations of the Chase account?
Despite having over 4,000 branches in the US, Chase isn’t opening any in the UK, so traditional counter services won’t be available. Chase hasn’t yet set out how customers might physically pay in cash or deposit cheques.
No number on the debit card
The Chase debit card does not contain a long form 16 digit number as you might be accustomed to. This is mostly likely to increase security, but it also means the only way to access your card details is via the app. In most use cases this shouldn’t be a problem, but consider the scenario where you need to pay for something over the phone. you’re either going to need to write it down before hand, or juggle the call and the app at the same time. A minor inconvenience, but an inconvenience all the same.
No switching guarantee
At present Chase is not a member of the current account switching service so if looking to leave your old account you would need to manually switch your direct debits and standing orders, and close your account.
No telephone or online banking services
With digital accounts we’ve gotten used to not having a telephone banking service. The fact is they even widely used anyway. Online or web based banking however is another matter. Whilst many actions can be performed via an app, some people and some things are easier via a browsers. Initially at least Chase doesn’t offer any web-based banking.
Approval for large transfers
Most banks have some form of daily limit on transfers. For some such as Revolut this can be as high as £500,000, but Chase confirmed via its customer support it has a daily limit of £10,000. If you want to transfer more than this you have to contact customer support three days in advance. This seems like a backwards step and is not in keeping with the competition.
Is my money safe?
Chase is a trading name of JP Morgan Europe Limited which is a regulated by the FCA and Prudential Regulation Authority. The account has full FSCS protection, meaning which means you would be eligible for compensation on balances up to £85,000 in the unlikely scenario of the bank going bust.
Additionally Chase has employed a new UK customer service team to help customers with any enquiries, as well of a raft of sucrity features and checks within the app. It offers 24/7 fraud monitoring, instant notifications of account activity and the ability to freeze your card if you need to. Confirmation of Payee (CoP) will also be implemented in the next few months.
How does the Chase account Compare?
Whilst Chase may be the new bank on the block all of its bells and whistles have been done before and each can be beaten individually by a number of the highstreet, and digital banks.
If you are looking to earn money form your account you’ll get £130 from switching the Santander 123 Lite account, which is quicker and easier then maxing out the benefits offered be Chase. See our guide for the best switching bank bonuses.
In terms of rewards and cashback it is possible to earn £18 a month via Barclay’s Blue Rewards. You’d have to spend £1,800 a month with Chase earn that. The advantage with chase comes from its less restrictive terms.
The 5% interest is a nice feature, but since it only applies to round ups it is limited. Just how much you could earn is difficult to work out as it will depend on your spending habits, bit even if making 50 individual transactions a month, the total amount rounded up going to be much less than you could pay into a Nationwide Flexdirect account (£1500) and earn 2% AER interest for 12 months. Similarly Starling has linked up with Moneybox allowing your rounded up savings to be invested in the stock market for potentially inflation beating rises.
Anyone considering a Chase account is likely looking to shun highstreet banks and go digital. In that regard the Chase account does compare well with its digital peers, namely Monzo and Starling, in terms of fancy features, and free free foreign spending, but lacks maturity. Chase has no history to consumer banking in the UK and is missing basic features that are taken for granted in regular UK accounts, services such as seven day switching, and confirmation of payee, both of which are employed by Monzo and Starling.
At present it looks to be a good if somewhat basic account, and possibly worth having as a back up to your main account. It will be come more feature full as it matures, one has to wonder why not get the basics in place first before trying to lure customers in with catchy incentives.