Is Suze Orman’s Approved Prepaid Debit Card Right For You?
The latest “big news” to hit the personal finance blogosphere is the release of Suze Orman’s Approved prepaid debit card. Suze Orman is one of the most well-known personal finance gurus out there, dispensing no-nonsense advice to millions. She has already been connected with products related to credit scoring, such as her FICO kit, and to best-selling books.
Her latest product, though, is a prepaid debit card. There are several financial products that Suze Orman could have chosen to endorse, or develop, and she picked a prepaid debit card — something that hasn’t sat too well with the wide community of personal finance bloggers.
Some of the details of the Suze Orman prepaid debit card include:
- Fees: This is the first thing that needs to be addressed in any discussion of prepaid debit cards. Fees are very important to consider. At $3 a month, the Approved card has a relatively low monthly maintenance fee. It’s not the lowest fee around for prepaid debit cards, but it’s far from the highest. There are other fees, though, as well. You can avoid some of the 20 or so fees that might cost you by meeting certain conditions, but there are an awful lot of potential costs to this debit card.
- Credit monitoring: You can get access to your TransUnion credit report and score (this is not the same as a FICO score, though) anytime for free during the first year. However, the cost of credit monitoring goes up after the first year if you still want it. However, this isn’t really necessary anyway, since you can get a free copy of your credit report from AnnualCreditReport.com each year. Plus, your TransUnion information is available to you for free at CreditKarma.com.
- Credit project: Suze Orman is also touting her credit project. She is planning on having anonymous data from the Approved prepaid card sent to TransUnion for analysis, to see if it might be useful from a credit score standpoint. It’s important to realize, though, that this will not impact your credit score. All the marketing hype makes it sound like it might, but it won’t. TransUnion won’t be including the data on your credit report. No prepaid debit card will help your credit score.
- Emergency fund: You can designate some of the money on your prepaid Approved card as an emergency fund. This is a nice touch, since the money can’t be accidentally spent. Your emergency fund is an essential part of getting your finances in order, and this card can help some people develop better habits.
But is the Approved Prepaid Debit Card Right for YOU?
The general consensus is that Suze Orman’s Approved prepaid debit card isn’t as bad as most other prepaid debit cards out there. And, for some people, there is a need for prepaid debit. But prepaid debit isn’t for everyone.
For the most part, prepaid debit should be used only by the “unbanked.” These are people who can’t get a bank account, for whatever reason. Indeed, there are many people who have a hard time getting a checking account. For those, the prepaid debit card adds convenience, and provides a way for them to receive direct deposits from work. This way, they aren’t subject to the huge check cashing fees that can come at grocery stores and payday check cashing outfits.
However, there is no reason for anyone who has a bank account to use a prepaid debit card. There are numerous free checking accounts available, and no reason for you to pay to access your own money. One of the issues many have with Suze’s marketing tactics is that she is implying that the “banked” should ditch their own accounts in favor of using the prepaid debit card she developed. If you already have free checking, using a prepaid debit card of any kind is a downgrade.
Finally, it is important to realize that the prepaid debit card will not help your credit score. If you are trying to rebuild your credit, and improve your finances that way, the Approved card is useless. No matter what information is being sent to TransUnion, it won’t be included on your report. If you are trying to rebuild your credit history, and can’t get a regular credit card, you are better off getting a secured credit card. You’ll still be paying fees, but your payment information will actually count toward improving your credit score.