Suze Orman, one of the most well known personal finance gurus in the media, announced a few days ago that she had created, and was releasing, a new prepaid debit card. Prepaid debit cards, if you’re not familiar with them, are cards, like credit cards, where you prepay and then can only use the card for amounts up to what you’ve prepaid. In most cases, they are marketed towards people who are unable to get credit cards because of bad credit.
Phil, from PT Money, blasted Suze for the card, on his site and on twitter. I can’t say that I entirely disagree with him. His problem with the card, and mine, is that prepaid cards should be a last resort for people who are unable to get a bank or Credit Union account that has a debit card attached to it. What Suze is doing with this card, however, is pushing it to the general public who really have no use for it, and, by using it instead of a debit card from their bank or CU, are going to be lining the pockets of Bancorp (the bank behind the card) and Suze. That’s shady, when you are claiming to be “America’s Most Trusted Personal Finance Expert”. If she is an expert, she should know better. And, I think she does. Which is why, instead of responding to PT (and others) on Twitter with a factual defense of the card, she had this to say:
Terrible way to take criticism, Suze. To some degree, I discount her response because of the “sassy” way that she responds to questions and such on her shows, but I think she crossed the line here. It’s one thing to tell the guy who calls in and asks if he should buy a new car when he’s 500k in debt an idiot, but another thing altogether when you’re calling a guy an idiot simply because he thinks your new prepaid card is a bad product.
Is the card a bad product? To Suze’s credit, unlike some prepaid cards that have had celebrity endorsers, this one has plenty of good things going for it. It includes a credit watch program, and a free credit report with credit score. It’s got a program to allow you to put money into a separate account for an emergency fund, free bill pay, and the ability to transfer money from one cardholder to another.
But, my Credit Union has all those things. A $3/month fee on the card isn’t the worst of the cards, but it’s still a fee. $36 a year to have access to your own money via a debit card? Come on. Again, my Credit Union does that, and they do it for free. Yes, there are some who are unable to get a bank account. And for those people, if you absolutely need to have access to a Visa/Mastercard card, then go for it. But, despite what Suze is claiming, don’t expect it to improve your credit score.
There is no way that any of the credit agencies are going to take your activity on a prepaid card into account. They’ve never taken your cash spending habits into account, and a prepaid card is no different than spending cash. Would it be nice? Absolutely. Many of us who make most of our transactions on debit cards or with cash would agree. But, it isn’t going to happen. Your cash spending has nothing to do with your credit, so why would a credit score take that into account?
I just don’t see enough difference between this, and other similar cards to say that Suze went out on a limb here and created a product that is going to change the industry. As a prepaid card, it’s decent. There are better. In the end, it’s still just a prepaid card that should be used as a last option when you can’t/won’t get a bank or credit union account with a debit card.
Read what some other Personal Finance Bloggers are saying:
Suze Orman’s Approved Prepaid Debit card is Bad for Consumers
And that’s just a smattering of the posts on the subject. I have yet to come across one that is entirely positive about the card. What do you think? Do you think that Suze did a good thing here, or is it just another way to milk some money out of her followers?