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Why Suze Orman’s Approved Prepaid Debit Card is Terrible

The Kardashians trying to make a quick buck by offering a debit card to their adoring fans makes sense. Even Gene Simmons offering an old school rock and roll signature debit card isn’t much of a story but when somebody like Suze Orman does it, that turns heads.

And it has. Some would say that Suze Orman is the queen of the personal finance gurus. She’s one of the few that is truly on the side of the consumer but her new debit card has some people questioning their Suzie love and maybe they should. Has Suzie gone rogue or is this card truly on the side of the consumer?

The Details

Companies who offer prepaid debit cards know that they’re going after the consumer that banks don’t want. Their credit is normally damaged to the point where a normal credit card isn’t an option and they don’t have enough money to keep in a bank account where they could use a debit card linked to their checking account. Of course there are other uses for these prepaid cards but the bulk of the market is subprime customers.

The reason that consumer advocates don’t like these prepaid cards is because they often come with high fees. A couple of bucks to reload the card, a few more dollars in monthly fees, charges to speak with a customer service representative and the ever-present ATM fee. Credit reporting agencies don’t consider debit card usage in to your credit score so having a prepaid card does nothing to help rebuild credit.

Orman’s card costs $3 to purchase along with a $3 monthly maintenance fee. Providing you stay in the Allpoint network and you make a minimum direct deposit of $20 per month, all ATM withdrawals are free. Your first call to customer service is free but after that you’re charged $2 per call. If you ask for cash back when making purchases, you’re charged an additional $2.

In addition, Orman has struck a deal with TransUnion that allows holders of her card to receive their credit report free of charge any time they request it which includes their TransUnion credit score. Although much less useful than the FICO score, this, along with her convincing TransUnion to begin tracking debit card activity, is a customer-friendly service.

The Verdict

You would think celebrities would learn from other people’s mistakes but apparently not. While this doesn’t seem to be something that will ruin Orman’s career, she isn’t scoring big points for the card. This article [3] along with many others seem to illustrate the fact that consumer finance advocates who are generally anti-credit card shouldn’t push a debit card that is less cost effective than simply paying with cash.

We aren’t the first personal finance bloggers to complain about the card. I don’t know if she was the first but Briana at 20andengaged.com [4] drew fire directly from Suze Orman herself for her critique. Phil also drew some heat for his less than stellar review [5] of the card. My friend Jeremy at GenXFinance.com [6] shared his thoughts as well. The consensus of us “idiots” was that it’s a terrible card.

In recent years, Suze Orman has taken some criticism for the many ways she’s found to capitalize on her fame. Her books, increasing television appearances, and now the debit card, in the eyes of some, have tarnished her reputation as somebody interested in giving unbiased advice.

But is that fair? Banks who issue prepaid debit cards have to charge fees because the people using them aren’t keeping enough money on deposit for the bank to make money on those funds. It would be unrealistic to think that a card like this would be fee free and it seems clear that Orman is in a can’t-win position as long as there are fees of any type associated with the card. This article [7] does a great job illustrating why we would rather our celebrities endorse watches than debit cards and the less than enthusiastic response to the Suzie Card seems to illustrate that.

Maybe writing another book would have been a better idea? What do you think?