Suze Orman's new prepaid debit card should be "Denied"
Shame on Suze Orman.
Up until now, I'd give her credit for helping people get out of debt and make smarter financial choices by speaking the gospel of getting rid of plastic and living within your means.
That's why I think there are some serious ethical issues with the author and television personality putting her name on a new prepaid debit card.
We've written about many prepaid debit cards, and we usually don't like them because they charge lots of fees.
Orman insists that her Approved Card From Suze Orman is different because the only expense is a $3-per-month service charge "if you use it how I tell you to."
Yet it doesn't seem to be all that different, or less costly, than most other prepaid debit cards.
Here are a few highlights from the Approved debit card's full list of fees:
- If you don't have a direct deposit or add at least $20 to the card each month, you'll be charged $2 to use in-network ATMs.
- If you speak to someone in customer service more than once a month, you'll be charged $2 per conversation.
- If you want to use a paper check, it's $1 per check and $20 for a copy of each check.
- If you close the account, there's a fee for having your balance returned through a check. We can't tell you what it is because it's not disclosed in the agreement.
- If you don't have direct deposit or a bank account from which you can transfer money onto the card, you'll need to use Western Union or Money Gram to rebuild your balance -- and of course you'll pay fees for that.
All in all, the Approved Card From Suze Orman is certainly not the worst prepaid card out there.
But it's not nearly as good as some of the best, including the American Express Prepaid Debit Card, which charges no monthly fees.
I also have a problem with Orman pitching a product based on the trust she's built through her TV show and books as a financial adviser the average person can understand and follow.
Most consumer advocates urge low-income families to obtain a free debit card through no-cost checking accounts offered by local banks or credit unions.
Yet here's an "expert" pushing a card that charges for everything from withdrawing money at an in-network ATM to sending a paper check -- on top of $36 a year in maintenance fees.
Three bucks a month might not sound like a lot, but people were so enraged about Bank of America's proposed $5-per-month fee to use debit cards that they dropped the proposal all together.
How is that offering good advice? It's not, but she stands to take a cut of those fees, so she pushes the product.
Orman has also partnered with TransUnion, one of the three major credit ratings bureaus, on this product.
The claim is that this benefits customers by providing them unlimited credit score access. But that score is a VantageScore, not a FICO score. A VantageScore means crap.
Plus, her touting that using a prepaid debit card will help build credit?
Please. There's no proof of that, and if you drill down into the agreement on the card, it's not stated that this actually happens, though there is plenty of language that they have the right to sell your information.
And what happens the next time TransUnion screws up, which it's apt to do based on its track record?
Is Orman going to go on television to criticize a company she's in business with?
She's clearly tying the Approved prepaid debit card to a segment on her show.
There's a regular feature where viewers ask if they can afford something like a kitchen renovation or big wedding, and she decides whether they are "Approved" or "Denied."
When criticism of this new business venture first hit the blogosphere a couple of days ago, Orman went on a rampage.
She called anyone who raised questions about its cost or the ethics of a financial adviser profiting from a product such as this an idiot.
Although she's since apologized, the tenor and viciousness of her initial idiot-bashing shows that she has a big blind spot with this.
Suze, I'm disappointed in you.