Suze Orman cracked under criticism after an onslaught of disparaging reviews of her new prepaid debit card, lashing out at reporters and bloggers in a series of embarrassing tweets. Here are a few examples:
In response to a young lady who tweeted a less-than-flattering review by trusted financial blogger Philip Taylor of PT Money:
@20andengaged Too bad you choose to believe an idiot over me- you just keep following others and see where it gets you
In response to a tweet containing a Fox Business interview with John Ulzheimer of SmartCredit.com:
@scrpbks4u read the great reviews of legit reporters or ones that are smart enough to understand what I am doing. There are many Suze haters
In response to a tweet from YourMoneyDrawer expressing disappointment in Orman’s decision to roll out a prepaid debit card:
In response to a sympathetic tweet from a supporter (in reference to a lot of intelligent, informed finance experts):
@Audrey00211 dont worry Aud. I can take it. I am use to people who know nothing think they know everything. You just have to pity them
The evil within
What are finance experts saying that so ruffled Orman’s fiscal feathers? That her card sucks. Which it does.
It’s not that Orman’s “Approved Card” is more costly or fee-heavy than other prepaid debit card—actually, it’s a lot better than most cards of its class. The problem dwells deep within the prepaid system itself.
Prepaid debit targets folks with no or low credit, people without bank or credit card access. Wary of checking account fees and made cautious by horror stories of ballooning credit card and other debt, some understandably look to prepaid. But is this any better?
Laden with fees, you’re likely to pay more for a prepaid debit card than you would many high-end credit cards. But here’s the really awful part: prepaid debit does not help build your credit score. Even if you’re spending responsibly, prepaid will never pave the way to better options.
Orman knows this well. In The Money Book for the Young, Fabulous & Broke (2005), Orman writes:
“I don’t think prepaid cards are a viable option, either, since they also aren’t going to help you build a reputation at the credit bureaus. If you can’t get a regular credit card, you are to get yourself a secured card and use it as a stepping stone to a credit card.”
And just recently, she received the following inquiry on Twitter:
@SuzeOrmanShow Hi Ms. Orman my question is prepaid better than a secured credit card from a credit union?
To which she responded:
@AYIRASOuL If you are currently looking to increase your FICO score right now a secure card is the way to go- you should stick with the CU
Orman suffers no delusions here. She knows prepaid debit is the pits. She knows secured is the only viable option for abysmal credit. The Approved Card will cost holders a minimum of $36 a year — higher than the annual fees of our go-to secured credit cards. But if you utilise additional services, fees can easily escalate to over a hundred bucks a year.
Why the hypocrisy? Money, of course. Releasing a prepaid debit card is very profitable. Kim Kardashian had her own for a while, and Lil Wayne just introduced the “Young Money Card.” Any reasonable mind would be a tad sceptical of financial advice from Kim or Wayne. Orman, however, has a lot of sway over how people spend. It’s sad to see a trusted finance guru compromise her beliefs for quick a buck. We’re guessing the backlash will be so damaging that Orman will abandon the scheme before long.
Worth a nod is Orman’s “Credit Project,” an effort to persuade credit bureaus to factor prepaid debit into credit reports and scores. She aims to report prepaid account activity to TransUnion in hopes of establishing a correlation between responsible prepaid debit use and credit card habits. Orman hopes to convince bureaus that prepaid debit can be used as an indicator of creditworthiness and should thus influence credit scores. Of course, it will take years for TransUnion to come to a definitive conclusion, and credit scores will remain unaffected by prepaid debit for the foreseeable future. The Credit Project has been denounced by some as mere “marketing fluff,” which it very well may be. We’d be more impressed with Orman’s endeavours if they didn’t involve profit margins.
After Orman (or her PR team) realised the potential detriment of her hostile tweets, Orman tried to make things right with a rapid-fire series of rueful apologies:
For anyone I called an idiot I too am sorry. I should have known better. That never should have happened so again I admit that I was wrong
@ronlieber Ron- I would never insult YOU- you are a great reporter and I admire the piece that you did- it was honest and thorough! Sorry
@kevinmeyers Thank you I admit I am not good at defending my self against things that are not true. It got to me. Wont happen again
Now that Orman has apologized to her critics, she need only apologise to her fans by retracting the Approved Card and resuming her former stance on prepaid debit.