Prepaid debit cards are the new celebrity fragrance.In the past two years ago, we’ve seen stars like the Kardashian sisters, Suze Orman, Russel Simmons, and George Lopez all plaster their faces on plastic.
For the most part, even their famous mugs weren’t enough to win over personal finance critics, who have widely panned prepaid debit cards for their bevy of hidden usage fees.
We’ve often been among those critics, and when we read last week that Justin Bieber was about to become the latest celeb to cash in on the trend, we were dubious at best.
Beiber has been hired to help market BillMyParents‘ SpendSmart Card, which bills itself as a parent-friendly way to encourage responsible teen spending.
It’s a pretty savvy marketing move on the company’s part, what with Bieber’s 30 million Twitter followers, 48 million Facebook fans and ability to move mountains with a single Youtube video.
But is it really a good deal for consumers?
After reading just about everything about the card I could get my hands on, I have to say … yes.
Here’s the main reason why:
The fees actually pay for something.
Like all prepaid debit cards, Bieber’s SpendSmart card comes with its fair share of fees –– including a $3.95 monthly usage fee, a $1.50 ATM fee, and a $7.95 replacement fee, to name a few. But unlike other cards, which are basically charging you for the privilege of letting them store your cash, parents are actually getting something in return here. The card not only lets parents get text alerts every time their kid swipes their card, but they can also set up recurring deposits to the account, track their spending from their smartphone, lock and unlock the card whenever they want, and block the card from working at certain retailers (say, a liquor store or bar).
This card could certainly be a useful tool for parents looking to teach their kids to manage money, especially if they don’t quite trust them to handle their own bank account yet.
That being said, it’s always wise to exhaust all of your other options first. Try a web tool like Tykoon, perhaps. For free, it lets you track your child’s allowance and makes sure kids save and donate a portion of their earnings each month. There are also cheaper prepaid debit cards on the market. Cardhub.com and Nerdwallet.com are great resources if you’re looking to compare the benefits between different cards.