Oprah-approved financial guru Suze Orman is shocking her fellow personal-finance experts by launching her own prepaid debit card today. Similar products from the Kardashian sisters and Russell Simmons have drawn major criticism for including exorbitant hidden fees. The publicity around the Kardashian Kard was so awful that the family pulled out of the deal, citing the “negative spotlight [that] threatens everything for which they have worked.” What is Suze thinking?
Suze is no Kardashian! She may be as well-known — not many personal-finance gurus are regularly spoofed on Saturday Night Live. Yes, she has endorsed a few products, but she has earned a strong reputation for giving good, no-nonsense financial advice. She has a serious career, no sex tape, and she certainly doesn’t need the money.
Prepaid debit cards are popular, but they have earned a terrible reputation among anyone who knows about personal finance. They function similarly to a bank debit card, but they don’t come with checking accounts. Instead, they often come with high fees for basic transactions, and fewer fraud protections than a credit card. They’re usually targeted to people whose credit is too bad for a traditional credit card, and who are not financially savvy. According to Ron Lieber in the New York Times, Orman’s move “raises so many questions that it is hard to even know where to start”:
How can the Approved card make money charging fees on par with those on Walmart’s cut-rate MoneyCard, while also paying a credit bureau for access to its services? Also, can it really be just fine with CNBC, where Ms. Orman has a weekly show, that her card will compete with products from companies she discusses frequently with viewers? And will her followers care that she is pushing purple pieces of plastic that will help her make money from their everyday spending?
There’s nothing inherently evil about prepaid debit cards. Orman designed the card’s structure herself, and her fees are “about as low as they come,” Lieber writes. She includes access to credit reports with the card, which is a great help to people trying to get their credit on track. She also vowed to Lieber that she shut the card down before raising fees in the next two years. In an email to her newsletter subscribers, she calls the Approved card “the single most important thing I’ve done in my career.” As a fan of Suze, I hope that’s a good thing.