Home > 2012 > Personal Finance

Suze Orman’s New Debit Card: Is Not Bad Good Enough?

Advertiser Disclosure Comments 3 Comments

It’s easy to blast Suze Orman for her issuing a new prepaid debit card, The Approved Prepaid MasterCard, and to draw parallels to the ill-fated Kardashian Card (though maybe not as fun). As prepaid debit cards go, though, it’s not bad. But that’s the problem: it’s not that great either.

Suze Orman has a lot more clout than what you’d gather from looking at details of this card. In other words, if Suze weren’t behind this card, it wouldn’t have garnered attention showered upon its launch. But hopefully she’ll pay attention to the feedback and shape it into something worthy of what you’d expect from a wildly popular and outspoken personal finance guru with millions of fans through her books, Oprah appearances, and television show.

What problems with the prepaid card industry can Suze Orman tackle—and how does her card stack up?

The Fine Print: My colleague, Credit.com Credit Card Expert Beverly Harzog, wrote last year about the difficulty of finding card details in the fine print. As she pointed out in her post, “Credit cards have the Schumer Box, which contains the APRs and fees. But with prepaid cards, the fees could be in a box or hidden within giant-sized paragraphs.”

I spent some time on the Approved Card website and found it to be pretty clear. A “fees” tab on the top of the Approved Card website leads to a page with a describing the fees in large type. The cardholder agreement is also pretty good, as far as those goes. If she wants to set the standard here, I’d like to see her add information that states clearly how to avoid the various fees. (Update: In the comments below, Jessica, a.k.a. The Debt Princess, points out that there is in fact a page on the Approved Card website that notes how to avoid fees. Thanks, Jessica.)

The Fees: Speaking of fees, the fees on the Approved Card are generally comparable to what you’d get from a moderately priced debit card. If you’re careful and you understand how to avoid fees, you may be able to get away with paying $3/month. But again, could she do better?

Beverly says she’s disappointed that the monthly maintenance fee is isn’t waived if you use direct deposit. The fee that most bugs me on this card and others, though, is the live agent fee. It’s waived for the first call per month, but if you need to talk with someone about a problem more than once a month you’ll have to pony up $2 a call. Her video says she wanted to create a “place that really valued you, and that put people first,” but I’m not sure that this customer service fee is in line with that value. People with bigger problems that require multiple customer service calls will get hit the hardest. I wouldn’t be surprised if they started calling into her show with customer service questions.

Safety: In a previous post about the pros and cons of prepaid cards, I noted that consumer advocates are concerned that prepaid cards don’t have the same protections as credit cards under federal law. And the funds deposited on some cards are not covered by FDIC insurance. Funds on the Approved Card are covered by FDIC insurance, though. And now that the CFPB has a director, it may be able to regulate these cards to ensure greater consumer protection.

In the meantime, it would be a good idea for Suze to make absolutely certain her fans who get this card understand that it doesn’t provide the same protections against fraud or billing problems that credit cards do. With a credit card, for example, if you buy something online and it’s not delivered as promised, you can dispute the charge on your billing statement. But with a prepaid card, there’s no similar protection—and by the time you discover the problem, the money may already be out of your account.

Credit Building: Debit cards don’t build credit, as Suze herself acknowledges. “You might not know it, but your purchases and other transactions using a debit card are not reported to the three major U.S. credit bureaus, TransUnion®, Experian®and Equifax®, so they’re not included in your credit report. That means your credit report can’t reflect responsible debit card spending behavior,” notes the website for the Approved Card.

She is offering free TransUnion credit reports and scores with this card—a nice perk—but the card falls short of offering anything really revolutionary on the credit front. Her site talks about how the card will be used for “The Credit Project,” an effort to share anonymous user spending data with TransUnion to see whether there is something there that could be used for credit scoring. So in other words, her fans get to pay to be part of an experiment that may help a credit reporting agency find a new way to market consumer data.

Maybe she should have come up with a co-branded secured card instead. It would have forced her fans to save money for a deposit account, and payment histories could be reported to the credit reporting agencies, helping cardholders build or rebuild good credit. She could have included a graduation feature, at which time those who managed their accounts carefully would get an unsecured card—and get back that money from their deposit to help seed their emergency savings account.

Again, Suze Orman’s Approved card could—and should—be something that will really help her audience improve their financial lives. A pretty purple card with a great name just doesn’t seem to be enough. But hopefully she’ll find a way to get there.

Image: David Shankbone, via Wikimedia Commons

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team