How Does Suze Orman’s ‘Approved’ Card Stack Up Against the Competition?
|January 18, 2012|
Financial guru Suze Orman is the latest celebrity to brand her own prepaid debit card, following the likes of reality TV’s Kardashian sisters, hip-hop artist Russell Simmons and rapper Lil Wayne.
Orman’s is called the Approved Card, and it’s promoted as “better than cash” and “safer than cash.” But reviews are mixed.
Prepaid cards are billed as a way to control spending or avoid steep bank fees. The idea is that you can’t go into debt because you can only spend the money that’s loaded on the card. The competition is fierce in this space because about one in four American households is “unbanked” or “underbanked,” according to the Federal Deposit Insurance Corporation (FDIC), and prepaid cards offer a way to avoid carrying cash.
But you can still rack up fees with prepaid cards. Orman’s card is no exception, though she says the card costs just $3 a month “if you use it how I tell you to.” For instance, you get one free monthly call to the customer service department, and then it’s $2 per call. If you want a paper statement, it’s $2. You also may get hit with fees at the ATM. The Approved Card partners with the Allpoint ATM network, which has 35,000 machines nationwide in stores such as CVS and Walgreens. Allpoint still charges $2 per withdrawal, unless customers set up direct deposit or a recurring bank transfer of $20 or more. If you go out of network, you’re charged Allpoint’s $2 fee, plus the ATM operator’s fee.
You can view a list of Approved Card fees at: theapprovedcard.com/fees/.
However, the Approved Card does look better than some of its celebrity predecessors. For instance, Simmons’ Rush Card has a $10 monthly fee, among a slew of other fees. It also gleams next to the disastrous Kardashian Kard. The sisters bailed on the card one month after it debuted in 2010 after its high fees were slammed by consumer groups. The card cost $59.95 just to buy and use for six months, or $99.95 for 12 months. That didn’t include the fees for any money loaded onto the card.
By contrast, the American Express prepaid card doesn’t have a monthly fee. Other prepaid cards, including Green Dot, give users ways to avoid the monthly fee, either by setting up direct deposit or making a certain number of transactions monthly.
Orman is working with the credit reporting agency TransUnion so that, eventually, customers’ records with using the Approved Card would be added to their credit reports. Currently, prepaid card use is not monitored by the credit bureaus, meaning that such cards can’t be used to improve credit history. Orman has said this is part of a two-year experiment to help the unbanked get credit. Yet it’s unclear how that experiment will turn out, how the data would be used and whether it would end up helping or hurting these consumers.
Orman’s card offers users unlimited access to TransUnion credit reports and scores for one year. That score, however, is a VantageScore, and not the more widely used FICO score. Keep in mind that, no matter which card you have, you can get one free report from each of the three national credit bureaus once a year at AnnualCreditReport.com.