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A Look Back at 2012 Credit & Finances

Prepaid debit cards

2012 was the year of prepaid cards. More and more Americans turned (and will continue to do so in the new year) to prepaid debit cards. As more become under, or unbanked in this country, and as more banks continue to increase their fees, there’s a wide open market for these financial products.

Celebrity Endorsements

Of course, it just wouldn’t be American if our celebrities didn’t have their own input, and in this case, their input is endorsing prepaid cards. With the likes of Magic Johnson and the ill-fated Kardashian sisters’ efforts, it was just a matter of time before Suze Orman jumped on the bandwagon. Her own endorsed prepaid card was one many looked forward to. After all, who understood the challenges of the collective American consumer than this woman? But how well was it received? We take a look back at the Approved Card to see how well Orman’s “consumer friendly solution to the prepaid industry” fared.

Launched in early January 2011, Orman was convinced her FDIC insured Bancorp Bank along with her reputation as a “personal finance guru” would take her brand far. She boldly stated,

This is my answer for all those who are looking for a better way to bank, use plastic and feel secure knowing that their interests are being put before fees and profit motives,

Orman said in a statement. The fees were outlined in a simple and easy to understand list on her website. And while the fees weren’t even close to the Kardashian Kard, which, by the way, was taken off the market for illegal fees, the Approved Card fell significantly short of being a great consumer product.

Buy the Card

Consumers had to actually purchase the card, which was $3 – some prepaid cards don’t have an actual cost associated with buying the plastic. Then, after the first month’s waived $3 fee, consumers then had to begin paying it, which in essence was a $36 annual fee. ATM withdrawal fees were $2 each, along with whatever else the ATM owner tacked on. The Allpoint network has around 35,000 machines around the nation. Want to simply check your balance via an ATM? That will cost you one dollar – again, along with any other fees by the ATM holder. Attempting to withdraw cash that’s not available on your card costs another dollar. If you make a bank transfer or have at least one direct deposit per month, you can waive those fees – though it’s up to you to contact the card’s bank.

Want to call a “live person” at the bank? You’ll get one free call to a live customer service agent per month. Any calls placed after that will cost $2 apiece. If you prefer paper statements, be prepared for fork over another $2 per statement (which if you do this every month, your annual fees increase from $36 to $60 – which is higher than even some of the more traditional credit cards. Replacing a card will cost $3 – again, most credit card companies no longer charge consumers for this service.


Here’s where many consumers got confused. The Approved Card allows unlimited access to your TransUnion credit report and TransUnion credit score. Only problem is, creditors use FICO scoring dynamics, which makes the TransUnion numbers moot. Plus, you can always request a copy of your credit card for free one time a year – the one that actually matters. This added bonus falls significantly short with Orman’s efforts.

The complimentary credit monitoring service raised red flags from the beginning. Here’s why: Orman said TransUnion will collect Approved Card user data to see whether it wants to include prepaid card data on its credit reports in the future. But for now using a prepaid card doesn’t impact your credit score, despite her assurances that her card will improve your credit. In other words, you’re basically giving Orman and Transunion free rein anytime they want to plunder through your credit report. Her “benefits” page includes this curious statement:

When you agree to be a part of The Credit Project, we will anonymously share Approved Card transaction information with TransUnion so that they may help us understand whether including this data in your credit report would impact your access to credit products.

You’re also automatically enrolled in credit protection – again, this seems to defeat the purpose. People are using prepaid products because they’ve struggled in the past with their credit and/or banks. Why would she believe first, credit protection was necessary to the extent that she touts it as a benefit and second, why would she hawk it knowing it serves no purpose if she’s limiting that protection to just one credit bureau? Has she forgotten there are two more big daddies in the credit reporting industry?

Changed Mind

She has long since been a vocal dismisser of prepaid products. In fact, in one of her books, published in 205, her vehement dislike is apparent:

I don’t think prepaid cards are a viable option, either, since they also aren’t going to help you build a reputation at the credit bureaus. If you can’t get a regular credit card, you are to get yourself a secured card and use it as a stepping stone to a credit card.

If it was relevant in early 2012, its star faded quickly as we can’t find anything related to the prepaid card outside her own website. This was clearly not a good year for Orman – and her vocal disapproval of prepaid products didn’t bode well when she began hawking her own version of those products she has always encouraged readers and listeners against.

It was a risk – and one she’s lost. Her prepaid card is higher than others on the market. It’s fee-heavy, which defeats the purpose for many consumers and frankly, some have called it arrogant that she would seek to make money off of those who are vulnerable right now. The question really is: If a caller asked her about this card, if her name wasn’t on it, would she encourage that caller to run out and get that card? Of course not – this time, though, she most certainly would because it lines her pockets even more.

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