Chase Offers New Overdraft Text Service

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Banks are embracing smart phone tools to spread the good word about their products and services. But Chase (Stock Quote: JPM) is taking the technology one step further with a new “text” service that warns you when your account is almost overdrawn.

Chase has already made some significant changes in its checking account overdraft policies. In the first quarter of 2010, Chase eliminated overdrafts related to debit card use unless customers specifically “opted in” and asked for overdraft protection. In addition, Chase no longer allows its customers to withdraw more money from their checking accounts than is available.

Now Chase is taking steps to let customers know when their checking accounts are in danger of dwindling down to zero. Using new mobile banking technology, Chase alerts customers via text message when their accounts are nearing a predetermined low level — say $50 or $100. Upon receiving the text message, customers can shift money from their savings accounts to their checking accounts with a simple text message reply.

Chase has dubbed the service “Action Text Alerts” and claims it is already sending out 725,000 such texts every week to U.S. customers.

Chase offers the following example on how the cash transfer would work.

“To transfer funds, customers should reply by typing the letter "T" — which stands for Transfer — followed by a space and then the dollar amount.”

Sample: To transfer $250 = T 250.

“If there is more than one eligible account to transfer from, the Chase text alert will show the customer the balance for two of those accounts and provide the option to choose either ‘A’ or ‘B’ as the ‘Transfer from’ account.”

Sample: To transfer $250 from one of those accounts = A 250 or B 250.

Customers are only allowed to make the transfer via text if it’s in direct response to the Chase text alert. The service is free of charge and can be used by any customer with texting technology on their cell phones. All a customer needs to do to set up the service is visit a Chase branch or enroll online at Chase.

The service is fairly flexible — in addition to the overdraft warnings, Chase customers can also elect to have their account balances texted to them once per day.

While banks haven’t exactly come full circle on bank overdrafts — they can still find myriad ways to charge you a fee if your account is overdrawn — at least they’re getting more aggressive about warning customers when their accounts are in danger of being short-funded.

Chase is a good example of banks being proactive, instead of reactive, on that front.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

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