When she announced the debut of her new prepaid debit card this week, personal finance guru Suze Orman told MSNBC, “I decided to create The Approved card after I heard from so many people who were being taken advantage of by the tricks and traps of the banking industry. I want to help people who need a low-cost alternative to whats out there, and who want to manage their money responsibly.”
Thats a pretty admirable goal, but does this Suze Orman-endorsed piece of plastic really live up to those expectations? Does it really do anything more for lousy credit scores than the other bad-credit credit cards on the market?
Dont get your hopes up.
To Ormans credit, shes helped millions of Americans take control of their finances. Her books are all bestsellers (weve read more than a few of them ourselves), and she hosts her own television show. Even Oprah loves her. Its safe to say that shes the most adored figure in finance since Alan Greenspan.
And thats why the Approved card is such a disappointment. Its not that its a bad card. Its that it really isn’t all that great either. Weve come to expect excellence from Orman, but she gave us something average.
Designed to help the 25% of unbanked Americans build a good credit rating, the card only costs $3 to buy. It reports all transactions to credit monitoring company TransUnion, and it allows cardholders to access their scores for free at any time. Since you have to load the card with money yourself, theres no risk of going into debt. It even comes with the same fraud liability protection guaranteed to standard consumer cards under the CARD Act. All in all, thats a pretty fair deal but the perks aren’t much different from the ones offered by other prepaid debit cards.
There are also downsides to the Approved card that Ormans faithful will have to cope with. The card charges a $3 monthly fee for maintaining an account, plus $2 per paper statement, $2 to call customer service and $2 for an over-the-counter cash withdrawal. While it lets customers use the Allpoint ATMs found in retailers like Target and Costco for free (as long as you have a monthly direct deposit set up), the Approved card also charges a $2 fee in addition to operating costs for any out-of-network ATM transaction. As a result, consumers can expect to pay about $5 every time they use an ATM.
Thats not the worst part about it. The biggest drawback of the Approved card is that using it wont actually boost your credit rating. Though Orman has boasted that her pet project is the first prepaid debit card to report to TransUnion, those reports dont appear on your credit score. As SmartCredit president John Ulzheimer explains, the data is being sent to TransUnion for the purposes of research. If you read further into the website it says plain as day: This data will not appear on your TransUnion credit report at this time.
So what’s the final analysis? While the Approved card might be a useful tool to help consumers build good financial skills, it isnt anything special. The perks dont really outweigh the fees, and the transactions you make have no effect on your credit score. If you really want to rebuild your credit rating, go for a secured credit card instead. The fees suck, but at least youll be building a history. Thats our opinion at least.