There is no denying the power of pop music sensation Justin Bieber. And while the Bieber brand is used to promote his music, events and merchandise, he has now begun to put his name behind a financial product: a prepaid debit card issued by BillMyParents.
What could go wrong?
In the past, we have seen other celebrities endorse prepaid debit cards with some questionable results. Two years ago, the Kim Kardashian prepaid debit card came under harsh criticism before being withdrawn under legal pressure due to the card’s fees. And last year, controversy ensued when celebrity personal finance adviser Suze Orman introduced her own debit card.
How does it stack up?
Let’s consider how the Bieber card compares to its predecessors The Kardashian Kard charged $99.95 to purchase and use for one year plus a $7.95 monthly fee thereafter, making it one of the more expensive pieces of plastic ever created. It also tacked on a 2.5% fee to load money from a debit or credit card. In contrast, the Suze Orman card also had no initial cost, but there is a $3 per month charge and a $2 charge to withdraw money from an ATM (plus any fees charged by the ATM owner).
The Bieber-endorsed BillMyParents SpendSmart Prepaid MasterCard for Teens is also free to obtain, but it has a monthly fee of $3.95. In addition, it also charges a 75-cent fee for loading money on the card from a checking or savings account, with a $500 daily limit. However, its $1.50 ATM fee is slightly lower than the Orman card.
[Related Article: Prepaid Cards: How to Become a Fine-Print Warrior]
Non-Celebrity Alternatives to the Bieber card
In 2012, American Express and WalMart released their Bluebird prepaid card. Although it lacks the appeal of a celebrity endorsement, this product has a relatively clear fee chart with no purchase or monthly fees. Cash can be loaded for free at WalMart stores, by direct deposit, or from a checking or savings account. This card also features electronic bill payment. Those who have employer direct deposit incur no ATM withdrawal fees, but there is a $2 fee per withdrawal for those who don’t. Better yet, parents can have up to four sub-accounts per card that feature daily spending limits, email alerts, and the ability to turn off ATM access. Another strong competitor without monthly fees includes the Visa Buxx card from US Bank.
It is up to parents to teach their teenage children sound financial habits, and granting them their own debit card can be a good place to start. But in doing so, parents need to show their children how and when banks collect fees. The Justin Bieber card will certainly draw in scores of kids who adore the teen idol, but it’s up to Mom and Dad to make clear exactly what they’ll be paying for the privilege of carrying a little piece of Justin in their wallets.
[Credit Cards: Research and compare prepaid credit cards at Credit.com]
Correction: This article was updated January 29, 2013. The previous version stated that University National Bank is issuing the Bieber card. A spokesperson from UNB says: “University National Bank is not the issuing bank for the pre-paid card associated with Justin Bieber nor will we be involved in that program in any way. University National Bank has a multi-year relationship with BillMyParents and continues to issue non-celebrity endorsed cards/non-Bieber program cards as we have done in the past with BMP.”
Image: Carissa Rogers, via Flickr