Drug use and debt: A credit card for recovering addicts


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    Next Step Card is one of the first prepaid MasterCards designed to support the addiction recovery process. There is a one time fee of $9.95 to enroll in the Next Step Card program, and purchase the primary virtual card and companion card. There is a monthly fee of $14.95.

    - nextstepcard.com

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    Financial adviser Suze Orman's prepaid debit card was named "One of the Best Prepaid Cards by US News & World Report, April 2012." 

    - theapprovedcard.com

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    Lil Wayne's “Young Money Card.” The card's website says: "Finally you can have it, all in one swipe. Get some wisdom for your wallet and take control of your financial future with a Young Money Prepaid Discover® Card."

    - youngmoneycards.com

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    In 2010, celebutante extraordinaire Kim Kardashian and her sisters lent their images to the "Kardashian Kard," a prepaid MasterCard aimed at teenagers.  The card's shockingly high monthly fees and user surcharges made it a target of critics and it was taken off the market shortly after its launch.

    - kardashiankard.com

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    The RushCard was founded as a joint venture between Rush Communications, owned by philanthropist and entrepreneur Russell Simmons, and Unifund Corporation. According to the card's website, Russell Simmons' vision was to create an innovative financial solution that would aid those unbanked and underserved by the traditional banking industry.

    - rushcard.com

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    “Growing up as a child, my mother worked two jobs to support our family... She taught me the importance of working hard to achieve my goals and how to protect what I have... That’s why I’m proud to bring you the Dynasty Prepaid Visa RushCard: A card that gives you the prestige and convenience of a debit card. Besides, you’ll never go into debt because you spend what you deposit in it. Discover the benefits of Dynasty, and get started on fulfilling your plans.”   -Alex Rodriguez. Rodriguez was featured in RushCard’s first Spanish-language television spot

     
    - rushcard.com

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    In 2012, entertainer George Lopez signed a multi-year marketing partnership with Mango Financial, Inc. Mango selected Lopez to help promote its innovative suite of payment and savings products designed for millions of Americans who are dissatisfied with their current bank relationship and millions more that don't have access to one. "This is not only an opportunity to promote a great company with great products, but also a chance to make a difference in people's lives," said Lopez. "My grandparents, a factory worker and construction worker, who raised me, taught me the importance of hard work and financial discipline to reach my goals. I'm proud to support a company that has made it easy and affordable for people to manage and save their money to help them realize their goals," he added.

    - mangomoney.com

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    Justin Bieber and financial services company, BillMyParents, entered into a strategic partnership. Justin Bieber will act as a brand ambassador for a new teen prepaid debit card through various forms of media, including social media, to drive awareness of BillMyParents and encourage responsible teen spending.

    - Chris McKay/Getty Images for Jingle Ball 2012

For some people, clear limits and boundaries are required to get control over bad financial behavior.  That was the case for Ryan Jaffe.  He's a recovering alcoholic and co-founder of the Next Step Prepaid Master Card.  It's designed for former substance abusers and marketed as a way to curb excessive spending during the recovery process.   Co-signers on the card -- often a parent or rehab sponsor -- can choose daily spending limits for the cardholder and limit the number of transactions per month. In short, the card will keep the holder's financial habits on a very short leash and allow people in recovery to spend their money in a healthy manner, says Ryan Jaffe, one of the co-founders of the Next Step Prepaid MasterCard.

What issues do a recovering addict face?

"Whether it be drugs or gambling or alcohol -- that was a way to cope with life. And then you remove that from the equation and then someone's getting sober and now you have a scenario where they're trying to fill their void with other things and a lot of times it comes in the form of spending," says Jaffe.  

The card is intended to address the situation of a person in recovery, but Jaffe says it isn't a long-term solution. It's meant to help addicts in their transition from treatment back into society and aid them to get to a point where they are self-supporting in a responsible manner.

"This card is not, by no means, a fool-proof plan or a relapse prevention tool. If someone wants to go out and drink or they want to go out and use, they will find a way to. We're not sitting here promoting that this is a way to completely stop someone from engaging in that behavior, but on the same hand, because one of the features of our card is we remove cash from the equation. They can't get cash back at ATMs or point of sale. They can't go to bars, liquor stores, nightclubs, gambling establishments. So if someone is serious about their recovery and they're having a bad day and they don't have that $20 in their pocket, that's one less option for them to engage in negative behavior," says Jaffe.

But what about the costs of the card? There's a monthly maintenance fee of $14.95 and an activation fee of $9.95. John Ulzheimer, president of consumer education at SmartCredit.com, says from a financial angle, prepaid debit cards have become a hot product over the past 12-18 months primarily because of the influence of celebrities like the Kardashians, Justin Bieber, George Lopez, and Suze Orman.

"From a purely comparative perspective, when it comes to prepaid debit card fees, $14.95 as a flat monthly fee is on the top of the market, but having said that, you also can't use the card at an ATM machine, which is where most prepaid card issuers are really racking up the fee-based revenue," says Ulzheimer.

Ulzheimer says the Next Step Prepaid MasterCard acts as low barrier, but is not a long-term solution and doesn't help you build credit. "When you start nailing me with $14.95 a month for access to my own money, that's when I start to think we're not really teaching people the right way of using money," he says.

About the author

David Lazarus is an American business and consumer columnist for the Los Angeles Times.

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