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January 16, 2012

Suze Orman: Advisor or Pitchman?

Filed under: Finance,Retail — Edgar (aka MrConsumer) @ 6:32 am

Financial counselor Suze Orman just came out with her own prepaid debit card called the Approved Card.

It is a MasterCard that you can use in retail stores to make purchases, but only up to the amount you have deposited onto the card. It is promoted as an easier, smarter way to be debt-free. Upfront she touts that it costs “only $3 a month if you use it how I tell you to.”

The card’s homepage goes on to tout nine benefits of the card including “free Transunion credit score, reports, and monitoring”, “safer than cash”, and “teach your teens financial responsibility.”

A closer look at the fee structure reveals some costly provisions besides the $3 monthly maintenance fee.

*MOUSE PRINT:

CARD PURCHASE FEE — $3
ATM WITHDRAWAL FEE — $2 (if you do not have direct deposit)
OVER-THE-COUNTER CASH WITHDRAWAL — $2

While these fees are less than other competing prepaid cards, this whole genre of card is set up to cost you money rather than save you money.

Making a deposit via direct deposit or transferring money from your checking account electronically to the car is free. (But would someone really put their entire paycheck or social security check onto a prepaid card every month? And if you already have a checking account, might not a regular debit card or ATM card be offered by your bank for free?

*MOUSE PRINT:

Conspicuously missing from their fee list is the cost to deposit money onto your card at an ATM or in person at a store.

Apparently you can only add money at locations that support either Moneygram or Western Union payments. The cost, they say, is typically $3.00 – $4.95. Whatta deal.

Here is another surprise.

*MOUSE PRINT:

If you only read the headlines about the free TransUnion credit score, report and credit monitoring benefit, you may miss the fact that the service is only free for the first year. After that, if you want to keep it, it is $143.40 a year.

Lastly, Suze proudly proclaims:

*MOUSE PRINT:

As she admits in smaller print, debit card purchase information is not part of anyone’s credit report and does not affect your credit score. She merely has a desire to see whether providing card use and purchase behavior to Trans Union will be considered in the future as a predictor of creditworthiness. Put another way, Suze has put a clever spin on the fact that she is sharing your purchase history with an outside company.

Prepaid cards have become popular as moneymakers for issuers particularly since they fall through the cracks of federal reform legislation that covers conventional credit and debit cards. If you must have a prepaid card for some reason, a better choice is the virtually fee-free American Express prepaid card. There is no monthly maintenance fee. In fact the only stated fee is $2 for ATM withdrawals after your first free one each month. Depositing money at a retail location incurs the same approximately $4.95 charge as does the Approved Card.

• • •

20 Comments

  1. “But would someone really put their entire paycheck or social security check onto a prepaid card?”

    Yes. I see requests all the time from people cashing out their retirement plans who want to direct deposit it onto a prepaid card. (The company I work for will not do that; we will only send it to a checking or savings account, but people do ask.)

    Comment by cmadler — January 16, 2012 @ 6:58 am
  2. I can see the use for it if you have a kid in college, and as the website says they send you a text every time you make a purchase so you know where they are spending your money. Personally, I expect my kids to get a job and I wouldnt want to police every purchase they make, this card isn’t for me!

    Comment by Peter — January 16, 2012 @ 7:38 am
  3. Regarding putting all of your social security onto a prepaid card, the federal government is moving to a paperless system requiring all recipients to have direct deposit. For those individuals with a less than stellar financial history, they often turn to check cashing services or Direct Express which is not always the best option.

    Comment by RJ — January 16, 2012 @ 9:31 am
  4. The only person who benefits from the use of this card is Suze Orman.

    Comment by PC — January 16, 2012 @ 10:49 am
  5. Its a rip-off plain and simple. These cards are geared towards people, who can no longer have bank accounts, due to their irresponsibility and bad credit histories. I would be embarrassed to use one. To me this screams, that I have hit the bottom of the barrel!. These cards have been around for about the last 10 years or so. I have known people, who have these cards, and none of them can get any type of bank account or credit. Bottom line is that these cards are for losers!.

    Comment by fred — January 16, 2012 @ 11:02 am
  6. @fred

    So you just lost your job you have bounced 5 checks. You have no money (and now you owe the bank a few hundred because of overdraft fees). Once you get into overdraft territory it is HARD to get out. I have seen people loose accounts because of 5 bucks and then ending up with 2-3 hundred in fees. Then they share the information with each other. So you can not even get an account somewhere else until that fee is paid. Oh and good luck finding anyone at some banks who will take your money if the debt is more than a year old. But hey your a looser because of it. Nice.

    This card is a scam though. This type of card is meant to prey on those who do not have any money. Shame on you Suze. Even if the ‘fees’ are lower than the others. She should know better. The worst thing you can do when trying to get out of debt is to incur more spending just to spend money even a simple ‘small monthly fee’.

    Comment by me — January 16, 2012 @ 11:45 am
  7. Huge scam!

    This should be exposed more on TV – will try to alert the station where she regularly airs her show.

    Some financial guru…!Working for her own pocket , trying to hide the scam.

    Comment by Marianne Bongolan — January 16, 2012 @ 12:24 pm
  8. There is a $2 ATM withdrawal fee waived if you use direct deposit. Whose ATM can you use without a “non-bank card” fee? That’s another $2-3 in charges.

    Still not a good deal. I lost a lot of respect for Suze Orman with this scheme. Yes, she preaches a lot, but quite a bit of her ideas are good. When they try to make money off some idea they have and rely on the good reputation they have gained for such a scheme, as far as I’m concerned, they don’t have my viewership any longer. Tell her sponsors.

    Comment by BobL — January 16, 2012 @ 1:13 pm
  9. Why did she even do this in the first place??? I say this is a bad business move on her part.

    Comment by Richard Ginn — January 16, 2012 @ 1:59 pm
  10. Suze Ormam is a real downer. She lacks encouragement to people and says Americans should give up on owning their own home, it’s a thing of the past. Now she seems to be preying on the person that is down on their luck and trying to get back on their feet by knocking them down a little further to put a dollar (or two) in her pocket. She’s like some of the old preachers I’ve listened to over the years, you’ll never be good enough so you just as well give up and succumb. And if you do has she got a card for you!

    Comment by Marguerite — January 16, 2012 @ 2:09 pm
  11. They pretty well nailed the card here, too:
    http://www.cbsnews.com/8301-505144_162-57359114/suze-orman-card-rip-off-or-righteous/

    I’ve thought in the past she had some good advice, accent “some,” but this one is over the top for me. I have more time for another channel now. Bye, Suze.

    Comment by Bob@thenest — January 16, 2012 @ 4:21 pm
  12. While I agree with many of the comments here, I did want to point out that as fcar as I know, Suze doesn’t require your entire paycheck or social security check to be direct deposited onto her card. She just wants a regular, set flow of funds into the card. I used to have portions of my paycheck direct deposited into several accounts – a chunk into saving, a chunk into checking, etc.

    Comment by Rich — January 16, 2012 @ 6:32 pm
  13. There are worse prepaid cards out there and this one’s not bad if you can direct deposit paychecks into it and use Allpoint ATMs. The long list of fees is troubling for the free ones are only free for now, they can go up anytime. I also don’t like Suzy’s suggestion of saving for an emergency fund on a prepaid card that doesn’t pay interest. Did Suze sell out? I don’t think so because of this page http://theapprovedcard.com/whychoosetac/lowfee/ where she spells out exactly how to limit fees to $3/month — you know of many cards that devote a page to minimizing fees/profit? Sure, she earned $$$ for the endorsement but she had to have negotiated hard for that page and the overall low fees.

    Comment by anonymous — January 17, 2012 @ 2:31 am
  14. I am glad this card is getting panned by everyone. It’s very disappointing when people who are supposed to be pro-consumer engage in this kind of practice. More reason to always always do your own research.

    Comment by Tundey — January 17, 2012 @ 11:54 am
  15. What bugs me about this is how she has gotten recognition on PBS to offer her shows (and PBS is intended as a commercial-free station, although they’ve started doing sponsorships BETWEEN shows) and now she’s promoting her infomercial on PBS’s dime, which means the dime of all those who support PBS.

    Comment by RS — January 19, 2012 @ 2:44 pm
  16. The Paula Dean of finance. Time for some butter and gravy.

    Comment by Rick — January 19, 2012 @ 6:21 pm
  17. I have lost all respect for Suze. Her advice is supposed to help people. All this does is keep them down.
    This card is only a good deal for Suze Orman…no one else.

    Comment by Jack — January 20, 2012 @ 11:48 am
  18. http://www.mediabistro.com/tvnewser/check-please-cnbcs-suze-orman-fights-debit-card-naysayers_b108455

    A whole lot more people do not like this card at all.

    Comment by Richard Ginn — January 24, 2012 @ 4:57 pm
  19. I lost respect for WGBH in Boston, because they air her shows! Just another shill!

    Comment by Dennis — January 30, 2012 @ 11:59 am
  20. I don’t know who is more of a snake oil salesperson, Orman or Ramsey. If they were truly honest, they would tell their followers that the fastest way out of debt is to take advantage of poor economic conditions by writing and selling a book instructing people how to use common cents. And yes, cents is a play on words.

    Comment by Bdazzler — February 21, 2012 @ 10:37 am

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