Banks enter the world of prepaid debit cards

Big banks are entering the business of prepaid debit cards, as more Americans turn to reloadable plastic as an alternative to checking accounts, check-cashing stores, and other financial options.

JPMorgan Chase is especially aggressive. In late June, it launched Liquid, a card that lets users load and withdraw money at Chase's extensive branch and ATM network at no charge.

Some analysts call Liquid a "game changer" because most prepaid cards charge for loading, withdrawal and other services that Chase is offering free at its network.

Wells Fargo began offering a prepaid card in March, and some regional banks are considering it, as well.

The banks' motivation: to tap the booming prepaid market and obtain new sources of revenue to offset big losses from lower fees collected on traditional debit cards used at stores, analysts said.

Cardholders who use Liquid can leverage Chase outlets to cash checks, load money and withdraw cash for free, said Jon Wilk, head of product and marketing for Chase consumer banking.

Wells Fargo's prepaid card charges users $5 to load money, unless they have a Wells Fargo credit card. It charges $3 to withdraw cash at a teller, the bank's website said.

Banks are tapping a booming market they helped create. Many Americans are turning to prepaid cards to flee rising fees on bank accounts.

For instance, Chase now charges $12 a month for basic checking, unless consumers qualify for waivers based on direct deposit or minimum balances. Its monthly fee for the Liquid prepaid card runs less than half that rate: $4.95.

Last year, consumers loaded about $57 billion onto prepaid financial products nationwide, up from $41 billion a year earlier. The total should jump to $167 billion in 2014, forecasts Mercator Advisory Group in Boston.

So far, prepaid cards are largely unregulated. But the new U.S. Consumer Financial Protection Bureau is developing rules to standardize fees and make terms for the cards more transparent for users.