Suze Orman started offering her Approved prepaid debit cards in 2012 and and received the backlash of her life. Two years later the cards are off the market. As of July 1, 2014 all Approved cardholders will no longer be able to use their prepaid debit cards. If clients did not spend the remaining money on their prepaid debit cards they will receive a check for the entire balance. So the question is, why is Suze Orman getting out of the prepaid debit card business?
Maybe it’s about the bottom line
According to the New York Times the fee on the Approved card was $3 per month, this is relatively low based on the industry standard. There are other celebrities who endorse prepaid debit or credit cards and the monthly fees are significantly higher.
Russell Simmons actively promotes a prepaid Visa card called the RushCard; the monthly fee on this prepaid card can be up to $7.95 for an unlimited plan. It is very possible that despite her financial background the Suze Orman Approved card was not profitable and this is why it is no longer offered.
Maybe it’s because the demand is low
Bancorp Bank was the financial institution who partnered with Suze Orman on this venture. They have decided to gracefully exit from the deal quietly with a simple letter to all cardholders. It is very possible that Suze Orman and Bancorp Bank are not making a publicity stunt out of this because the prepaid card was not high in demand.
A prepaid debit or credit card allows consumers to load money onto the card and spend it wherever debit and credit cards are accepted as a form of payment. Consumers can put money onto prepaid cards in a variety of ways including making a cash deposit, setting up direct deposit, transferring money from PayPal as well as depositing checks. It’s very possible that consumers are turning to traditional checking accounts versus prepaid cards.
Prepaid debit and credit cards do not require a credit check for approval because there is no line of credit or checking account attached to the card. This is convenient for consumers who may have a less than perfect financial situation and may not be approved by traditional lenders and financial institutions. However because prepaid cards aren’t actually a credit product they do not help consumers improve their credit score.
Maybe it’s a conflict of interest
As a financial advisor Orman preaches good financial habits. The world of prepaid debit cards helps clients because it gives them access to various payment options (not just paying with cash). However it does not help consumers rebuild their credit score. Orman may see this as a conflict of interest because it’s a temporary solution to a much bigger financial problem.
Orman may prefer consumers take the necessary steps to actually improve their financial situation instead of just looking for easy access to payment solutions.
At this time it is still unclear why Orman and Bancorp have stopped this venture, but as of July 1, 2014 the Approved cards will no longer be in use. If you have questions about your card or account balance please contact their customer service department.
Tahnya Kristina is a certified financial planner and personal finance blogger. With over a decade of experience in the financial services industry she enjoys helping people manage their money wisely, become debt free and find financial happiness. You can follow her on Twitter @TahnyaKristina.