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Suze Orman introduces prepaid debit card
The TV host and financial adviser says her goal is to help cardholders that usually use only cash become more credit-worthy.
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Kai Ryssdal: Love her or hate her, Suze Orman is a force in the personal finance business. She is, quite possibly, the biggest personal finance celebrity there is.
So the news today that she's breaking into the prepaid debit card business is actually news in certain circles. Orman's promising low fees and free credit reports for her customers.
Marketplace's Nancy Marshall Genzer has more.
Nancy Marshall-Genzer: Suze Orman says put your financial life in her hands. Sign up for her Approved prepaid debit card, and you’re home free.
Suze Orman: My goal has always been to save America one wallet at a time. And I believe that this card will absolutely do so.
The Approved Card works like this: Deposit at least $20 onto it every month, and pay just $3 a month. Use the card to pay bills and shop.
Now, other celebrities have put their faces on prepaid cards, but Orman is different. She has a consumer finance show on CNBC. Viewers rely on her for advice. And now she’ll be peddling a prepaid card. Conflict of interest?
Lauren Saunders: I don’t know if she’s in it to make money.
That’s Lauren Saunders, managing attorney at the National Consumer Law Center. She met with Orman a few months ago. She believes Orman really is on a mission.
Saunders: To prove that prepaid cards can be a viable option for people and can help them on the pathway to financial success.
By building good credit without a credit card. Orman’s card offers free credit reports from TransUnion. She wants consumers to be able to build up their credit scores through debit cards.
Michelle Jun of Consumers Union says that’s unheard of in the financial world.
Michelle Jun: I don’t know if we could quite call it a game changer but it certainly would shake things up.
But Jun says, even in her missionary zeal, Orman does charge some extra fees. And you should read the fine print before you sign up.
I’m Nancy Marshall-Genzer for Marketplace.
Honestly it is sad that there is no other way to establish good credit with a FICO score without going into debt. There are a lot of people out there who are not in a financial crisis because they have always spent what they have earned and saved. Those people she be commended and have FICO scores that reflect their wise and responsbile choices. FICO scores and credit reports are not only used for obtaining a loan. Many credit reports are pulled for various things like a job or obtaining a public service like electric or water. If you have no credit because you have always paid cash you are penalized and treated no better than those who have acted quite irresponsibly with their money. What I understand about Orman's card is that it is simply a debit card that has the potential to one day be used by the credit reporting agencies as a way for establishing credit without going into to debt. Are there fees associated with the card? Yes. It costs money to run a business. Are the fees reasonable? That is up to the individual consumer. I think this may be a step in the right direction for America to change the way they spend. Do I like my credit being pulled in order to pay for a public service to my home or to determine how good of a rate my car insurance will have? No, but this is where we are and we should have a way for the people who are living debt free and financially responsible the same opprtunities as those who have great credit scores. Is a person who borrowed to purchase a car and paid back that loan with interest better than a person who saved and bought that same car with cash? A credit report and FICO score says YES. I say NO.I actually commend those who are willing to wait until they can afford what they want to buy. America's Credit Reporting Agency should recognize those who worked hard and saved for what they own just as credit worthy as those who paid back what they have borrowed AND they both should be commended because they are both doing a WAY better job than our own government. A lot more can be said, but a final note: If Suze Orman's debit card is changing the way America's sees cash and pay consumers, I say jump on board. If you want to play the Credit Reporting Game, you can always pay for a Secured Credit Card and it will report. It is the same concept as you put up the cash you borrow against and the more money you put on it the better it looks on your credit as it looks as if you are being extended more credit by the bank who holds your money. The one thing I would say about the Suze Orman card that I don't like is that it states that you will have access to free credit reports and scores from TransUnion. Free credit reports is good, but the scores from TransUnion are NOT FICO scores and should not be confused as such. FICO scores are generally what lenders use - especially home mortgages & auto loans. Insurance companies have their own scoring models.The Credit Reporting Score is a complex system that most people don't understand and honestly who has the time? It is better to not have to play the game, but is it really fair to be penalized when you have all the life skills but no resume to back it up?
