"Many people are in the dark when it comes to money," Suze Orman once said, "and I'm going to turn on the lights." Perhaps her new prepaid card--The Approved Card from Suze Orman, which was released Monday--is part of that effort. On the other hand, maybe it's simply another revenue stream for the acclaimed author, television host, entrepreneur, and financial advisor--one that compromises her journalistic integrity and lumps her in with the likes of Lil Wayne and the Kardashian sisters.
There's only one way to find out--by comparing The Approved Card to the best prepaid cards on the market. Prepaid cards are used primarily as replacement checking accounts or financial literacy teaching tools, and according to Card Hub's Prepaid Card Study, the Green Dot Prepaid Card and the American Express Prepaid Card are best for these applications, respectively.
[See 50 Ways to Improve Your Finances in 2012.]
The Approved Card vs. the Green Dot Prepaid Card. Prepaid cards are well-suited to be replacement checking accounts because they provide the same features as a traditional checking account/debit card (save for the physical checks). Green Dot Card is the best replacement checking account because it is free to use if you deposit at least $1,000 per month and use in-network ATMs. In other words, one can direct deposit his paycheck and access cash for free. How does Orman's Approved Card compare? It would cost $3 per month for the same type of usage, plus a $3 initial fee. In other words, if you are serious about getting a prepaid card to use as a replacement for your checking account, stick with the Green Dot option.
The Approved Card vs. the Amex Prepaid Card. Prepaid cards make good financial teaching tools because of their similarities to checking accounts and the fact that they offer online account management, which lets parents review spending with their children. The Amex Card is the best teaching tool since it has a simple fee structure and only costs around $6.66 each month for someone who loads a $100 allowance and makes two ATM withdrawals. The Approved Card from Suze Orman only costs $3 per month for the aforementioned type of usage, plus a $3 initial fee, which makes it a better option.
[See How to Find the Best Bank Account for You.]
Approved Card features. Cost isn't the only metric by which to evaluate the Approved Card. It boasts a number of features, and it's important to determine which are helpful, which are not, and which are merely marketing gimmicks.
Pros:
-- Emergency Fund: The Approved Card allows users to set aside money for emergencies, and while this money is not unattainable, the fact that you must contact customer support prior to using it will serve as an impediment to overspending.
-- Identity Theft Protection: Cardholders' personal information will automatically be monitored by TrustedID.
Cons:
-- TransUnion Services: TransUnion credit reports and scores are already free elsewhere, and this "service" will cost unassuming consumers $11.95 per month after the first year.
-- Customer support cost: Only the first call each month to a live customer support agent is free. Subsequent calls cost $2 each.
-- Complicated Fee Structure: Prepaid cards are known for having a number of different fees, and The Approved Card has many more than its counterparts from Green Dot and Amex.
[See Should You Join a Credit Union?]
Marketing gimmicks:
-- Suze's Advice: While Orman's advice is certainly useful, you're not going to get any personalized insight via your prepaid card account. You therefore shouldn't count advice attainable by turning on the TV as a reason to get The Approved Card.
-- The Credit Project: As noble and important as this sounds, it's really just a way for TransUnion to study the value of adding prepaid card information to their credit reports a couple of years down the road. Cardholders don't benefit from this at all, at least not in the short term.
Final thoughts. Suze Orman's prepaid card is certainly better than other recent celebrity-hawked cards, but that's immaterial from a consumer perspective. No one cares which public figure has the best prepaid card, but rather which prepaid card is the cheapest and most useful for their needs. In some cases, Orman's card fits the bill, but not always, so evaluate it in terms of your intended usage and avoid overpaying for Orman's reputation or name.
This article was written by Odysseas Papadimitriou, founder and CEO of Card Hub, a leading online marketplace for the best credit card deals, prepaid debit cards, and gift cards.
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