It may be called "The Approved Card," but it's being met with mixed approval.
As you probably know, Suze Orman, personal finance guru and star of her own CNBC show, "The Suze Orman Show," has been in the news a lot this week due to the debut of her new MasterCard prepaid card, The Approved Card. Since the comments range from complimentary to bad enough that you can imagine Orman taking certain people off her holiday card list, I thought I'd take a quick gander at what credit card experts are saying about her new prepaid card.
I'll lead off with some comments from Curtis Arnold, founder of CardRatings.com, who told CNN's Headline News: "I wouldn't call it groundbreaking. There are other cards with fees and features that are comparable, if not better." Like what? He cited Walmart's card, issued by Green Dot, which has a $10 bonus for signing up and eschews the $3 issuance fee for applying online.
But the most colorful description of Orman's prepaid card, at least that I've seen, comes from John Ulzheimer, president of consumer education at SmartCredit.com, who told FOX Business' Gerri Willis that while the fees on Orman's prepaid card are indeed low, it's still "the best of a bad category or…the cream of the crap."
"At the end of the day, it's still $36 a year to have access to your own money," explained Ulzheimer. "I can go to a credit union tomorrow, stick five dollars in an account, open an account, get a debit card and it's going to cost me the grand total of nothing."
And then there's Reuters' Felix Salmon, who makes the excellent point that while the prepaid card may be pretty good for the unbanked, that is, those who don't have a bank account, Orman seems to be "actually encouraging the banked to become the unbanked -- to close out their bank accounts and use the Approved Card as a checking-account alternative. And I don't think that's a good idea."
Salmon goes onto say that "the whole Suze Orman brand is centered on giving good financial advice -- but Orman is helplessly conflicted now, and she's giving advice which looks very much as though it's mainly serving Suze Orman's interests, rather than the general public's."
Not everyone hates The Approved Card, though. The New York Times' Ron Lieber wholly approved of the low fees in a recent article and observed, "whether consumers could do better with a free checking account (and yes, plenty still exist) would depend on whether they value paper checks and in-person service. Financially, they would most likely do worse if they bounced those checks or used overdraft services and paid $20 or $30 for each transaction."
And Forbes contributor Arjan Schüte said of prepaid cards that have high fees, "Suze Orman's card is a pleasant departure from this trend." And as long as you mispronounce her name accordingly, you have to love Forbes' headline, too: You Suze, You Don't Lose.
For those who don't know the details yet, The Approved Card is a prepaid card, not a credit card. You load money on the card, and then access it by using the card wherever MasterCard debit is accepted. Money in your account is FDIC insured.
But all this convenience comes at a price. The card costs $3 to get, and then it's $3 a month (the first month's charge is waived). ATM withdrawals are $2 per month, a fee waived at AllPoint ATMs for customers who load at least $20 per month. There are some other really random fees. For anyone who is interested in getting the card, the web address is TheApprovedCard.com, and I'd recommend checking out the "fees" page as well as the Frequently Asked Questions.
And definitely think twice before signing up for the "free" TransUnion credit score, reporting and monitoring service. It's free for one year, a $143.40 value, as the Approved Card website makes clear. That is generous, but if you sign up for a year, and in month 13, forget that you've signed up, your prepaid card will start being billed at $11.95 a month.
As for what I think, in case anyone cares, this is a safe answer, but I agree with everyone quoted above. A prepaid card isn't a bad choice for people who are unbanked and can't get a credit card or bank account. Orman's card is far better than some of the other prepaid offerings in the last couple of years, like the infamous Kardashian Kard that was riddled with fees. And I applaud Orman for trying to service the unbanked and not soak them for everything they have.
But for those who do have bank accounts and credit cards, I'd quote the late, great Leslie Nielsen in The Naked Gun: "Nothing to see here, move on…"