“Payday Friday” may soon be replaced by “Payday Wednesday.”
This week, JPMorgan Chase, America’s largest bank, became the latest financial institution to offer customers early access to their direct deposits.
Chase, he has consumer and commercial The banking arm of JPMorgan Chase announced that its 1.4 million Secure Banking customers will automatically receive access to some direct deposits – such as paychecks, tax refunds, government benefits and pensions – two days earlier.
Providing access to critical direct deposits can help customers — especially low- and moderate-income households living paycheck to paycheck — pay bills on time, avoid late fees and navigate unexpected expenses, said Ryan MacDonald, CEO. Chase’s growth financial products.
“For them, the gap between when the check clears and when the bills are paid is often a big problem,” he said. “To fix that, we want to close that gap.”
Chase joins a growing list of fintechs and traditional financial institutions (including Chime, Current, Capital One and Wells Fargo) to offer customers early access to their money. Also, in the past year, several banks such as Bank of America, Citi, and Chase have begun phasing out overdraft fees.
Services like early access to direct deposits and waived overdraft fees come at a time when historically high inflation is draining excess consumer savings, said Mark Hamrick, chief economist at Bankrate.
“At a time when prices have been consistently high, this has robbed consumers of their purchasing power,” he said. “It means that every dollar in the bank is becoming more and more precious.”
The Federal Reserve has implemented massive rate hikes to stop rising prices. But in recent months, inflation has remained very high, prompting the Fed to continue its hawkish approach and increasing the risks of a sharper and more painful economic downturn.
“We are in an environment where it is widely agreed that the risks of recession are high,” Hamrick said. “This means that there is also a high risk of unemployment. So if income is interrupted, that means individuals will experience greater financial stress.’