Approved! Suze Orman offers prepaid card

NEED TO KNOW
  • Orman calls her card a 'better, cheaper alternative'
  • Financial guru's Approved Card costs a minimum of $36 a year
Approved! Suze Orman offers prepaid card

The world of credit, debit and prepaid cards has not been a quiet one in recent months and the latest addition to the frenzy is certainly not going unnoticed. Personal finance guru Suze Orman has expanded her traditional role as consumer advisor with the launch of her self-branded Approved Card, a prepaid MasterCard.

Orman launched her Approved Card Monday as a consumer-friendly solution for those with few other banking options, either due to poor credit or inability to pay the fees associated with other debit or credit cards. Prepaid cards have risen in popularity as banks have restricted easy credit and many traditional checking accounts become more expensive. Prepaid cards allow consumers to load a card with money and have become an appealing option for many people in the midst of personal economic turmoil.

Orman says her card, backed by FDIC-insured Bancorp Bank, is a better, cheaper alternative to the prepaid cards already out there, most of which are criticized for having a plethora of associated fees.

"This is my answer for all those who are looking for a better way to bank, use plastic and feel secure knowing that their interests are being put before fees and profit motives," Orman said in a statement.

So this card has to be fee-free, right? Wrong. Simply purchasing Orman’s Approved Card costs $3. Then, there’s a monthly fee of $3, but the good news is the first month’s fee is waived. The card is associated with ATMs in the Allpoint network, which has about 37,000 machines nationwide, and costs $2 per transaction, $1 to check a balance and another $1 if the card is declined by the ATM. Customers can avoid these fees, however, by making a direct deposit or bank transfer of at least $20 a month. One more note -- loading cash onto the card costs from $3.50 to $4.95 because customers must rely on MoneyGram or Western Union to transfer the funds.

Out-of-network ATM withdrawals will always cost $2, plus any extra fees charged by the ATM’s operator, and in order to do a cash-back transaction at a store or retailer, you’ll have to pay $2 each time. Got a question for the bank? You get one free call to a live customer service agent per month, but any call after that will cost $2. And if you still like receiving those traditional paper statements, that’ll cost you another $2 per statement. Replacing your Approved Card will cost $3.

Banks and card issuers were under the gun during much of last year after introducing debit-card and other various fees associated with traditionally-free accounts. After widespread criticism from customers and watchdog groups, many of the fees were canceled, but the hype certainly made American consumers more aware of what they’re paying to access their own money and accounts. With the Approved Card, consumers will pay a minimum of $36 a year to access their own money.

Prepaid cards focus primarily on direct financial transactions, rather than long-term savings. Orman’s card does offer a way to segregate money into a sort of savings account, but one that earns no interest.

“Will I put other cards down? Yes, if it’s a credit card,” Orman told The Huffington Post. “Like an alcoholic who doesn't want liquor in their house, people don't want a credit card in their wallet," Orman said. Using a prepaid card currently does not impact your credit score.

When compared to other celebrity cards, like the controversial Kardashian Kard, which was taken off the market in late 2010 after allegations that its fees were illegal, the Approved Card is pretty appealing. The Kardashian-backed prepaid card cost $99.95 just to own, including a $9.95 purchase fee and monthly fees of $7.95. But when compared to other lower-fee prepaid cards in the industry and offers from various credit unions, Orman’s Approved card is nothing special, said Curtis Arnold, founder of CardRatings.com.

“I wouldn’t call it groundbreaking,” Arnold said. “There are other cards with fees and features that are comparable, if not better.” For example, Walmart’s card, issued by Green Dot, offers a $10 bonus for signing up and waives the $3 issuance fee for applying online, Arnold said.

And then there’s that underlying question: Why pay for a card when you can get an account for free? It’s always a better option to go with a bank or credit union-issued free checking account instead of a prepaid card, said John Ulzheimer, CEO of SmartCredit.com. "As long as you don't have horrific credit, you can get a debit card with no usage fees, no monthly fees, and none of the other fees on prepaid cards," he said.

One thing consumers will get with Orman’s card is free unlimited access to their credit report and credit score. However, TransUnion is the only credit bureau offering their services for free to Approved Card users, so in order to get a complete picture of their credit, customers will still have to pay for reports from the other two credit bureaus.

Ulzheimer says Orman is taking a big risk by introducing her card, even though she may have far more credibility than many other celebrities who have jumped into the prepaid card business. "At the end of the day, what she's introducing is still a prepaid debit card,” he said, “and prepaid debit cards should be at the bottom of the list when it comes to plastic."

Join the conversation...

HLNtv.com welcomes a lively and courteous discussion as long as you follow the Rules of Conduct set forth in our Terms of Service. Comments are not pre-screened before they post. You agree that anything you post may be used, along with your name and profile picture, in accordance with our Privacy Policy and the license you have granted pursuant to our Terms of Service.
Real (expensive) estate: The 10 priciest houses
Your Money | See all 731 items Real (expensive) estate: The 10 priciest houses

Advertisement