Suze Orman’s new prepaid card, an update

In January 2012, Suze Orman launched a prepaid card that she created and spent $1 million of her own money to develop.  She worked with TransUnion, one of the three national credit reporting agencies, to develop it and the card is issued by Bankcorp Bank. The card is called the Approved Prepaid MasterCard®.

Card Features

The features of the card are:

A monthly fee of $3 includes up to four cards and all benefits when you use the card exactly how Suze tells you. (this is code for “it’ll cost you more if you use it some other way.”)

No activation fee is charged.

No cancellation fees or inactivity fees are charged.

Receive free TransUnion credit reports, monitoring and credit scores (Vantage Scores) with unlimited updates.

Includes free 24/7 email updates of changes to your TransUnion credit report.

Receive free identity theft protection.

Includes unlimited free cash withdrawals from any Allpoint® ATM each month are included. You must make at least a $20 direct deposit or electronic transfer during that month.

Receive either text or email after every transaction, daily or weekly.

Receive account balance updates every morning.

Includes a free dashboard to track spending and saving in up to five different goal funds and three connected secondary cards. The dashboard also includes a return tracker that will remind you to check the status of returned Approved Card purchases.

Funds are FDIC insured up to $250,000 through The Bancorp Bank.

The Approved Card is covered by the MasterCard Zero Liability Policy for Lost and Stolen Cards.

Weaknesses

It does not help develop a credit history or FICO score, despite what’s being said.

You get a VantageScore for free, not the FICO score, which is used by most credit grantors.

You are charged a monthly fee for the prepaid card; real debit cards don’t have a monthly fee.

You cannot deposit personal checks, cashier checks or money orders.

If you don’t make direct deposit or bank transfer of $20 or more each month are charged $2 per withdrawal at Allpoint ATM’s, $1 per balance inquiry and $1 per decline.

After the first call to customer service, you’re charged $2 per call.

Paper statement fee is $2 per statement. (ouch)

Limited to spend $2,000 on the card per 24-hour period and maximum per 30-day period is $9,999. This can be a problem if you want to purchase a vacation package, airfare, hotel room, and/or large ticket item.

Not included on credit report

Transaction information will be collected by TransUnion to determine the impact it has on credit, which may take 18 to 24 months to determine. There is no guarantee that this data may be used to predict credit risk or even be included in your credit report.

This card is a prepaid card in which you transfer money onto it, you can only spend what is on the card, and you pay as you go. You can’t buy now and pay later as you can with a credit card. You don’t have credit, so it doesn’t show how responsible you are with your money or how you pay your bills. It will provide those who don’t have credit cards, a means to obtain things that require a credit card, such as rent a car and reserve a hotel room. It does offer many more features than a regular debit card with many free features – credit monitoring, credit reports, credit scores, identify theft protection, and cash withdrawals.  There still is much fine print that includes additional charges such as paper statements and customer service calls.

If you are able to deposit money regularly onto a prepaid card, you should consider opening a checking account with a credit union and get a debit card.  There are no monthly fees for most, if not all, credit union debit cards and most offer free checking with or without direct deposit of your paycheck.

Credit Damage Expert, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.

Categorised in: Credit Cards, Credit Monitoring, Credit Report, Credit Score, Money & Identity

This post was written by John Ulzheimer