JPMorgan Is Opening Up New Branches In Low-Income Areas — Will It Make It Easier For You To Get a Payday Loan?
Written by
Chris Ozarowski
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Amen Oyiboke
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JPMorgan Chase has recently announced plans to open 100 new branches in lower-income areas, where banks have historically had a lower presence.
In many areas, these brick-and-mortar branches may give customers an alternative to price-gouging check cashing services and high-interest payday loans.
Is Chase Bank Opening Locations in ‘Unbanked’ Areas?
According to data from the Federal Reserve, 6% of Americans in 2023 were “unbanked”, meaning neither they nor their spouse had a checking or savings account. For lower-income Americans — those with a household income of less than $25,000 — that number was much higher, at 23%.
Part of the reason for this is that many banks have avoided opening branches or have closed their branches in lower-income areas. Out of all census areas in the U.S., 4% are categorized as “banking deserts” — areas that don’t have a physical bank branch close enough for local residents to make use of it.
If these places get a brick-and-mortar Chase location, it can end up saving local residents a lot of money.
Chase Bank vs. Check-Cashing Services
When residents don’t have access to banking, they are more likely to keep their money in cash. They are also more likely to use alternatives like check-cashing and payday loan shops.
If you don’t have a bank account and you get your salary as a physical paycheck, you may need to use a check-cashing service. However, the fees at check-cashing places can end up taking a huge cut of your paycheck over your lifetime. Fees at a check-cashing service are often a percentage of the check, instead of a flat fee. Sometimes they can go as high as 12%.
If you have an account at Chase Bank, you won’t pay anything to cash a check or deposit it into your account. If you’re not a Chase customer, it may still end up being cheaper — Chase charges non-customers a flat $8 fee for cashing a check no matter how much the check is for.
Can You Get a Payday Loan at Chase?
If you need money but are still a few days or weeks away from your paycheck, you can take out a payday loan. However, payday loans may come with predatory fees. Payday loan providers may charge $15 to $20 for every $100 offered. Some interest rates on payday loans can get as high as 600% per year. This means that if you can’t pay the loan back for a full year you will owe the payday loan service seven times what you borrowed from them.
While Chase doesn’t offer payday loans, they do offer starter credit cards for customers without any credit history who have just opened bank accounts. An average credit card will charge an annual percentage rate of 15-30% a year — much, much less than a payday loan.
If you do have to borrow money to pay for groceries or bills, paying with a credit card or using a credit card cash advance is a much better option than a payday loan. The limit you get might be lower at first, but if you make payments regularly you can get your limit increased within six months.
Why Is Chase Bank Opening These Locations Now?
In the past, banks may have been reluctant to open locations in lower-income areas because they believed they would make less money there from their investments than in other places. Banks are required by law to provide services to lower-income Americans as well, but enforcing this can be difficult.
So why is Chase Bank willing to open locations in these areas now? Jamie Dimon, the CEO of JPMorgan Chase, has said that the bank has analyzed the situation and found that opening locations in underserved communities is a good business move.
Chase Bank has also adjusted its strategy — the locations it is opening are meant to be community center branches, with small business and financial literacy workshops. Chase says it wants its customers to grow financially, and to build trust between them and their brand at the same time.
In places like New York’s Harlem neighborhood, where Chase opened its first community center branch in 2019, customers opened more checking accounts than at any other branch in the area between 2019 and 2023. Personal savings balances at this branch grew by 73% over four years. According to Jamie Dimon, these branches contribute to the company’s bottom line, even if they offer lower-margin services.
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