Yes, I resorted to a Billy Madison pseudo-insult. I do that sometimes. But really, it’s the only way to start off this post. With a little bit of humor, before I tear into what may be my “meanest” blog post ever. Maybe.
On January 5, I got an email from Suze Orman. I don’t remember when I signed up to get emails from her, but that’s not the point. She alerted me (and all her other email subscribers) to her People First Movement, set to kick off on January 9th. Well, I can’t say I marked my calendar, but I was curious about what “new financial product” she was excited to tell us about. I figured she was referring to another financial tracking website. You know how much I love those
January 9th rolls around, and my inbox is blessed with another note from Suze. She was offering a new pre-paid debit card. I remember reading that email, and I’m pretty sure I said something to the effect of “HELL NO!” before closing the entire web browser in anger and disgust.
But seriously, I was kind of taken aback. Suze Orman’s offering a pre-paid debit card. On the one hand, I think it’s good that she’s making a pre-paid card that, on the surface, seems to have fewer fees than other pre-paid cards, assuming you know exactly how to get around most of them (http://theapprovedcard.com/fees/ for reference), but I still haven’t accepted the basic premise that some individuals can’t get even the simplest bank account, and must resort to using a pre-paid debit card. I might be out of touch, but shouldn’t a credit union or bank be willing to offer a no-frills bank account?
Then there are the three ways to re-load the card: direct deposit, transferring from another account, or paying Western Union or MoneyGram $3.50 to add cash to the card. All three of those seem like perfect reasons to NOT get the pre-paid debit card: If you get direct deposit (from a paycheck), you can probably get a bank account. That’s usually what banks like to see when opening accounts. If you have another bank account, couldn’t you use that instead of a pre-paid, fee-laden card? And if you’re using cash, why pay $3.50 to load the cash then a $3 fee per month to use it? (except perhaps if you wanted to keep your cash safe in the non-bank account).
Ron Lieber posted a follow-up about the card, having asked readers for possible good reasons to get the card. The three he lists here include: being unwilling or unable to get a bank account (for any number of reasons), as a budgeting tool to limit your spending to a set amount, or as a pseudo-checking account for kids. I guess the other option is if you need to do online transactions or rent a car/book a hotel/flight etc., you’d need either a credit or debit card for payment.
The whole FICO score aspect of this is confusing, too. It’s unclear (at least to me). It sounds like she’s offering a free year of credit monitoring/scores/etc. from TransUnion. Which is basically what you get from CreditKarma, but without having to use her pre-paid card. Then there’s The Credit Project, where you can volunteer to have your transaction data sent to TransUnion, so they can decide if they maybe in the future want to include pre-paid debit cards in credit scores/reports. I don’t have much faith that a credit agency is going to change any time soon.
Anyway, that’s a long enough rant. I just am always wary of these pre-paid cards, they seem to take advantage of people who already have trouble with money. And it seems like Suze Orman is abusing her power as a “personal finance expert” in getting people to sign onto something that may not be in their best interest. I know a lot of other people have posted their (negative) reviews of the Approved Card. Let me know if you wrote one, and I’ll link to it!
I want to just finish this by saying that, usually, I’m okay with Suze Orman. One of the books I read when I was first figuring out this whole personal finance thing was her book Young, Fabulous, and Broke. And I enjoyed her keynote speech at the Massachusetts Conference for Women in 2009. I just think that this is a bad move on her part, using her fans’ trust for financial gain.