What We Need from Suze Orman Instead of Another Celebrity-Endorsed Useless Prepaid Debit Card

If you don’t want to use (or can’t use) a credit card, then don’t.

Place your money into a bank or credit union and use their debit card. Despite what you may hear, not all banks charge debit card fees. Find a bank or credit union that doesn’t charge you money each month to hold (and provide access to) your money.

If you are unable to get a bank or credit union account for whatever reason, then wait until you can. If you must get some form of card, then you may want to consider a prepaid card. This should really be seen as a last resort. If you need to get a prepaid card realize that you are more than likely going to pay some service fees.

Right now there are two prepaid cards on the market that I’m aware of that give you the ability to avoid all fees by jumping through a few hoops (i.e. minimum balance, direct deposit, etc.). The rest of the cards in this market are pretty bad in the sense that they are marketed as a long-term solution and that you are paying a bunch of fees to access your own money.

Russell Simmons has a card. It’s bad. The Kardashians created a “kard” in this market. It was bad too. So bad, that it was run out of town. Who’s up for another celebrity-branded prepaid card? This time it’s not just a celebrity. It’s the self-proclaimed “Most Trusted Personal Finance Expert” in America today, Suze Orman. She just released The Approved Card. I like Suze, but I don’t like that she has created this card and is marketing it in this way.

Suze Orman Approved Card

Me? Ignorant of the big picture? Let's have a look.

Here’s why, after seeing last night’s Nightline where Suze preaches about getting rid of holiday debt, of all things, that I can’t believe Suze is pushing this card:

1. The card comes with a $3 monthly fee, or $36 a year, plus a bunch of other possible fees depending on how you use it. That’s very close to the $5 per month fee that Bank of America backed off on. And with Bank of America at least you get a bank, with checks and tellers, and loads of ATMs.

At best this card is on-par with the Upside Visa prepaid card. Why not create a truly no-fee prepaid card? Why would Suze create this versus just partnering with someone like PerkStreet, a card that is truly helping consumers get out of debt and get rewards for spending? Ironically, Bancorp is backing both deals.

2. The card is marketed as an “easier, smarter way to be debt free”. As opposed to what? Cash? It’s certainly not easier or smarter than a no-fee bank debit card.

3. The credit project is dead on arrival. Your activity on this card will be anonymously reported to one of the credit bureaus (TransUnion), in hopes that they will one day consider it for inclusion in your credit report. This will never happen. Debit or prepaid spending has absolutely nothing to do with credit and your ability to be viewed as credit-worthy.

By definition, debit and prepaid spending should not be on your credit report. Anyone who thinks otherwise is living in la la land. But does that stop Suze from using the credit project thing as a selling point? Nope. In her interview with Huffington Post, she says,

“Middle-class Americans…don’t want a credit card in their wallet because don’t want ability to get themselves into trouble again,” she said. “The problem with that is if you spend money on debit or cash, it doesn’t report to the credit bureaus so it doesn’t give you a FICO score.” “I wanted to create (a scenario) where people who pay with debit and cash are rewarded…”

This card will not help your credit score or report. Don’t take my word for it. In this interview with Fox Business, Jon Ulzheimer points out that the fine print from the Approved Card site:

“The information we share with TransUnion concerning your Approved Card account will not appear in your credit report.”

In summary, the Approved Card is just another prepaid debit card, not a financial product that should be marketed as a “revolution” or a “movement”. If you want to use one for a month or so while you wait to get a bank account, that’s cool. If you want to give one to your kid while he/she is in college, that’s probably a smart move. But this isn’t a smart, long-term solution for the “middle-class” or even the un-banked.

The smart, long-term solution is to get consumers involved with a responsible bank or credit union and then gradually introduce real credit if you want to build a healthy credit score. Suze should have done what Dave Ramsey has done and partnered with a real bank (in an ad deal). Instead, she created her own prepaid card product and is marketing it to the masses, instead of who it should be aimed at: the un-banked looking for a short-term solution.

Here’s two more takes on the card that go a bit easier:

What do you think? Is the Approved Card a good financial product for the middle class? Should Suze get a pass where Kim Kardashian did not?

Share Button



Last Edited: March 8, 2014 @ 10:52 pm
About Philip Taylor

Philip Taylor, aka "PT", is a husband and father of two. He created PT Money back in 2007 to share his thoughts on money and to meet others passionate about managing their finances. All the content on this blog is original, and created or edited by PT. Read more about Philip Taylor, and be sure to connect with him on Twitter, Facebook, or view the Philip Taylor+ Google profile.

108 comments
Terry Pratt
Terry Pratt

Debit or prepaid spending can tell lenders a lot about your spending patterns, which can give lenders a better idea of your credit risk.

Some credit card issues view certain types of spending (e.g. liquor stores, strip clubs, casinos) negatively and this does affect the limits and terms extended to these spenders.

Such a person could "fool" their credit card issuer by making only "good" purchases on their credit card, while putting all "dubious" purchases on a separately-issued debit card.

I think credit card issuers would dispute the claim that debit or prepaid spending "has absolutely nothing to do with credit and your ability to be viewed as credit-worthy."

philosopher3000
philosopher3000

This post is bogus, obviously put on by the banking interests. Orman's card is good if you need a card to rent a car, or to rent a hotel, or anything that requires the insurance and services that come with a MaterCard. Eventually, the $3/month service fee will be waved if you keep a minimum balance, and it never hurts to have more options. Keep cash, get the card too, it is the first step in ending our debt-money economy and putting credit-cards in the grave. At the very least it will lower all other credit-card fees and interest rates through shear FREE-MARKET COMPETITION.

exMBB
exMBB

@ReformedBroker Asking Suze Orman for investing advice is like asking Glenn Beck for commodity trading advice

JamesStein
JamesStein

Suze Orman's card is not a bad prepaid card, but it is nothing more than that either. It is not even the best prepaid card out there, as that distinction belongs to American Express' prepaid card, which comes with no monthly fees at all. But what really bothers me is that Orman advertises her card almost like the solution to all of your financial problems, provided "you use it how I tell you to." The thing is, if the "unbanked," who constitute the vast majority of prepaid users, were always doing what they were told with their finances, they would never have been cut off of the banking system and come to rely on prepaid cards in the first place. http://blog.unibulmerchantservices.com/why-suze-ormans-prepaid-card-is-a-non-event

John at MarriedWithDebt
John at MarriedWithDebt

Hey PT - thanks for leading the charge on this. I think the consumer has awakened to the idea that they can start raising hell when companies try to screw them. Let's stick with this and see what comes of it.

fundmyfund
fundmyfund

@ReformedBroker Dont you love America's celebrity culture. I expect a host of celebrity backed cards now that Kardashian led the way

Jerry
Jerry

Wow. I'm really disappointed in her. I really like Suze but this is beneath her. I think your insurance for saving money on fees is to use cash or use a credit card and pay it off each month. I can't believe she would try and pawn this off on us. I think it will lead to people going down the wrong path.

The Happy Homeowner
The Happy Homeowner

As I tweeted to you earlier, I find her behavior to be tasteless. Kudos to you for defending your position--obviously it's what the majority of people agree & believe in!

Kathryn C
Kathryn C

Saw your tweets flying around on this and had to come on and see what the heck is going on. All I can say is wow wow wow. This is juicy. Enjoyed the read, and the comments, of course.

MoneyPlanSOS
MoneyPlanSOS

WOW! People are pretty passionate about this. @Jackie Walters gave me the heads-up about this thing and I thought it sounded interesting. But, just like everything else, you just can't take someone's word for it and need to look into it yourself.

I wrote my own thoughts on this in a post where I explained each of the "9 reasons why Suze thinks the Approved Card is the smart choice for you" and my thought about why the benefits are not really all that great.

MyMoneyDesign
MyMoneyDesign

Shame. When I first saw this, I couldn’t believe it. Everyone knows that pre-paid debit cards (which is basically what this is) exploit the poor and ignorant. This is not what I would expect from someone who built a celebrity-status career on promoting financial health.

Nick-SAFTM
Nick-SAFTM

I'm a big fan of free enterprise and do see some value in the free ID protection and potential for building credit, but (a) I agree that there are better alternatives for prepaid card, including this and from create your own (@20andengaged) and (b) just can't believe Suze resorted to calling people idiots and ignorant. Shame on Suze.

MotherWouldKnow
MotherWouldKnow

Suze Orman has lost all credibility with me and many others, not for her card (which you've done a good job of questioning), but for the way she has treated you, @howsmarriedlife and other financial bloggers over the past day or 2. Her twitter responses are unbelievably rude and speak volumes about what must underly her calm and steady media personna. (Or maybe she has hired someone to run her twitter feed who has absolutely no common sense, judgement and decency - in that case, she's no better off than if she wrote the tweets herself.)

johnulzheimer
johnulzheimer

@ptmoney It's getting worse. The suggestions that the card will help your credit is getting close to dishonest.

Jeffrey Trull
Jeffrey Trull

I think Suze Orman should be held to a higher standard than Kim Kardashian. Clearly people trust Suze for financial advice, but she's clearly just cashing in here. What a shame!

Thanks for the honest review, Philip, and for putting this out there!

moneycone
moneycone

I don't expect this card to last long. There are better options out there. A real disappointment from Suze.

Mike D
Mike D

In the Nightline segment she says "you are not charged every time you take money out of an ATM" but in the article you link to it says there is a $2 charge. That could get interesting.

Eric J. Nisall - DollarVersity
Eric J. Nisall - DollarVersity

I don't like her or Ramsey for their approach to solving financial problems in a "one size fits all" manner. This just goes to show that not only is she about profits more than people, but she truly has no business sense. Rather than take the criticism and ask the bloggers to form a focus group to help her make the product better, she quickly turns around and attacks everyone who has a different take on the subject and the card itself.

Now, I've never been shy about going against the grain and challenging popular opinion and actions, but I would never bash someone for making rational, grounded comments and having a real basis for their opinion. This just proves that she's not above taking advantage of her followers for the sake of getting her name out there and making a buck. Of course, many of those followers will blindly go wherever she tells them, even if it put them in a worse situation than they already were, but that's a subject for another day.

Anyone who attacks my fellow bloggers with baseless and shameful comments is instantly my enemy ;-) lol

Philip Taylor
Philip Taylor moderator

Sure, they "can" tell a lot. But they don't. The fact is, the bureaus don't use prepaid or debit card information. When that changes, my claim can be disputed. Until then, it's just fact.

Suze's card is using the illusion of a credit-effect to market her card. That's just wrong, and in my opinion she should be held accountable by federal financial protection agencies.

Latest blog post: Day 22: Stop the Junk Mail

Philip Taylor
Philip Taylor moderator

@philosopher3000 Nope. Not bogus or put on by anyone but me, Philip Taylor, independent blogger.

Orman's card is good when compared to other prepaid debit cards, yes. But that's about all you can say about it at this point, imo.

You are entitled to your opinion, but I think the best thing for the unbanked to do is to get banked or use cash until they can.

ptmoney
ptmoney

@BWFeldman Thanks. Definitely stirring things up. Disappointed that the big media outlets seem to be giving this card a pass.

tboofy
tboofy

@EverythingFinance Slam! Love your comments, especially where you quoted Suze's own words about the uselessness of a prepaid card!

Shelley Elmblad
Shelley Elmblad

@MotherWouldKnow I don't think Suze Orman is actually managing that Twitter account, but she sure should be watching the tweets since she is being represented by that account. I'm not defending her, I said my piece earlier and I don't care for her one-size-fits-all financial advice, her television and radio personality and I find the way her representative is treating other via Twitter to be very unprofessional. And, if she is actually using that Twitter herself...oh, wow...that would create a whole new layer to my negative opinion.

Philip Taylor
Philip Taylor moderator

Yeah, I guess since the fee is waived for the first month for some then her statement is true. But deceptive.

SunWKim
SunWKim

@Eric J. Nisall - DollarVersity People keep bringing Dave Ramsey into the mix. Why wouldn't his "one size fits all" not work for you? Which part do you object to? How many people have you helped get out of debt? He touts 10 million individuals... I don't agree with everything he says either, but I think his focused approach with emphasis on behavior modification does help of people.

tboofy
tboofy

@Shelley Elmblad@MotherWouldKnow I would be EXTREMELY surprised if that weren't Suze commenting. People who are paid to comment in someone's behalf would be more careful not to cause offense. I think Suze is the only one who *could* get away with saying the things that were said.

Eric J. Nisall - DollarVersity
Eric J. Nisall - DollarVersity

@SunWKim It has nothing to do with how many people I have helped out of debt, as that is not my business.

The one-size scenario is very easy to explain. Not everyone is in their particular situation for they same reasons. Their understanding of finances and/or credit will not be the same. Their ability to take the same action is not the same.

If you ask anyone with an understanding of finance, or any financial blogger what a good financial advisor should do, I guarantee that almost all of them would say "listen". Listen to a client to get an understanding for how they got to where they are now. Listen to determine how much knowledge they have and how much information they can handle.

The worst thing someone who advises others can do is assume that they know everything about an individual's situation and that what worked in one instance will work for all cases.

Shelley Elmblad
Shelley Elmblad

@tboofy You have a very good point! It would be interesting to find out. I bet if someone else has been making the snarky remarks, they get fired if this blows up (anyone contact mainstream media?). If Suze is, there will be dramatic excuses and possible public rants. @MotherWouldKnow

tboofy
tboofy

@SunWKim I'm not in debt, I just like hearing everyday advice on how to manage the little things in life. Why would I pay to do one of his courses if I don't like him? He's OK, just not my cup of tea. I'm still a huge fan of the books Richest Man in Babylon and Millionaire Next Door. Classic and timeless.

SunWKim
SunWKim

@Eric J. Nisall - DollarVersity

> Not everyone is in their particular situation for they [sic] same reasons.

They are all in debt. You can always pay to have personalized financial counseling if you want.

> The worst thing someone who advises others can do is

> assume that they know everything about an individual's

> situation and that what worked in one instance will work for

> all cases.

Show me examples where Dave Ramsey's simple steps would not apply to someone. They are simple steps because getting out of debt is a simple process. Its just the emotion and behavior modification that's the hard part. There's nothing to it, but to do it.

SunWKim
SunWKim

@tboofy@SunWKim He also has a video. Maybe FPU DVD will be easier to digest. I'm working on my debt too.

Eric J. Nisall - DollarVersity
Eric J. Nisall - DollarVersity

@SunWKim@tboofy Here is a snippet from the FPU FAQ page:

Can I get any additional assistance?

Yes! All coordinators and FPU members can call the office at 877.FPU.COOR or 888.227.3223 anytime for additional assistance. If the question is short and simple, then one of our phone advisors will be glad to answer it free of charge.

However, if it is a more detailed and complex question that requires a trained counselor's assistance, phone counseling or one-on-one counseling is available through a network of trained counselors. For more information on counseling, visit thecounseling page.

What does that mean? To me it means that the people who moderate the "classes" are not trained financial professionals and cannot offer any kind of assistance to the people paying for the class. They don't get anything close to the 1 on 1 consulting that a financial professional should provide clients. To me this is the equivalent of an H&R block tax course where they run through a bunch of topics in a condensed amount of time, then send you on your way.

I'm just saying that none of these people can deliver on the claims that their books and systems are for everyone, especially when specialized attention is not included and costs extra.

tboofy
tboofy

@SunWKim I've read his Total Money Makeover. It was pretty good. But I couldn't get past his stupid mantra "Live like no one else so you can live like no one else." Isn't that redundant? Live like no one else so you can continue to live like no one else? I know what he means, but I think he could've picked a better motto. I read all the personal finance books and pick and choose what I like best. I like Mary Hunt (Debt-Proof Living) best of all because I really relate to her story and her Christian morals. But there is good info everywhere...even in Suze Orman's books :-)

SunWKim
SunWKim

@tboofy@Eric J. Nisall - DollarVersity Dude, he's got a book on how to get out of debt. You can buy it for like $3 on Amazon used. His web site has basic advice, but the nitty gritty stuff is in the book. There are also FPU classes you can attend that are near you...

tboofy
tboofy

@Eric J. Nisall - DollarVersity I agree with you on Dave Ramsey. I read his stuff and take from it what I like, but he doesn't really resonate with me. He focuses a lot on getting rich and owning your own business, and neither of those is likely to happen with me. I'm a teacher and I love what I do, and I just want to be solvent and have a good retirement. I find he talks a lot about getting out of debt without offering enough suggestions of HOW to do that. My brother LOVES him and relates to him, and that's Ok. Different strokes.