You’d think Suze Orman would be sceptical of prepaid debit cards given the bad wrap they received at the hands of the Kardashian Kard and Russell Simmons’ Rush Card.But the financial mogul knows a marketing opportunity when she sees one, and there’s never been a better time to offer drowning Americans a credit-building lifeline than now.
Enter Orman’s Approved card, which launched today. It offers most of the features we’ve come to expect from prepaid debit cards: a $3 fee to obtain the card, a host of ATM fees, plus a monthly $3 “account maintenance” fee.
Orman took steps to make this card for consumers better than other celebrity prepaid cards.
“All those other celebrity card issuers cared about was how much money they could make and how much in fees its users would pay,” said Odysseas Papadimitriou, CEO and founder of Evolutionfinance.com. “Actually it’s a card that has pretty good terms and is pretty competitve.”
Among Approved’s perks: Its $3 purchasing fee cuts the standard price for this service in half, and it can be used at thousands of ATMs nationwide, making it a boon for frequent travellers and consumers wary of opening a checking account with Bank of America.
For those with a nasty check-bouncing habit who can’t get approved for a checking account, Orman’s card presents itself as a viable alternative. But like most things involving money, the Approved card comes isn’t all that it seems, and consumers might be disappointed when they realise the card won’t boost their credit score.
The card comes with unlimited access to credit reports and histories, courtesy of TransUnion (though not the more widely-used FICO scores). With identity theft running rampant, this sounds like a smart idea, but it’s key to remember that most of these services are money-wasters—you can easily track this data yourself—and that debit cards aren’t the key to becoming more creditworthy.
Papadimitriou was sceptical toward the feature which gathers cardholder’s spending data—”What would appear? That you shopped at Walmart and saved?”—and he doesn’t see how consumers would use that information either, aside from learning how to set a budget.
“It’s a marketing gimmick, plain and simple,” he said.
A company spokesperson offered a different take: “The Approved Card from Suze Orman is trying to transform the way the credit bureaus view Americans’ spending habits. This is an experiment and we won’t know for 18 to 24 months whether people will be able to get credit for responsibly handling their money. Suze has staked her reputation on giving consumers a low cost alternative to pricey and misleading prepaid cards because she believes they deserve a break, not more bait- and- switch from people trying to get rich.”
This brings up the issue of what good the card actually does and how consumers should approach it. If the aim is to boost your credit, then it’s better to start with a secured card instead. With these cards, you put a security deposit down, purchase a card, then (ideally) use the card responsibly to hoist your score over an extended period of time.
Anyone can get approved for these cards, regardless of taints on their credit score, and it’s easy to add more money to their deposits over time, said Papadimitriou.
The main advantage to a prepaid debit card is bill pay, so if keeping better track of online bills is a must, go ahead and sign up with Suze.