I heard Suze Orman talking about her new prepaid card the other day, in an interview with Audie Cornish on National Public Radio. It’s called The Approved Card from Suze Orman.
Orman criticized prepaid cards that charge excessive monthly fees. She said that her card would sell for $3, and would have a monthly fee of $3, which would be waived for the first month. And she vowed that the fee would never go up.
So how does this card really stack up against other prepaid cards? Is Orman doing the public a service, or is she just out to make money?
Answer: It’s a good card. Consumer Reports had its financial services experts review the terms and conditions of the card and found that the fees are consistent with the better prepaid cards in the marketplace. For example, the $3 per month fee will get you up to four cards and there are no activation, cancellation, or inactivity fees. That’s pretty good.
Building Credit With a Prepaid Card? – Not Yet
In the interview, Suze made much of the fact that her card would report consumers’ buying data to a credit bureau, TransUnion. The implication is that using this card responsibly can improve your credit score, However, that’s a misconception. The credit bureau has agreed only to collect the data and study whether such data could be used in the future to build credit.
Odysseas Papadimitriou, CEO and founder of Evolutionfinance.com, was skeptical toward the feature which gathers cardholder’s spending data—”What would appear? That you shopped at Walmart and saved?”—and he doesn’t see how consumers would use that information either, aside from learning how to set a budget.
“It’s a marketing gimmick, plain and simple,” he said.
If you really want to repair your credit or to establish a credit history, you should go with a secured credit card. But if you’re looking for a prepaid card to avoid having to carry cash, or to pay bills online, or shop online, then Suze’s card is not bad.