When you think of the most famous personal finance gurus, two personalities will likely come to mind – Dave Ramsey and Suze Orman.
Davey Ramsey is known for promoting the so-called Debt Snowball method and recently gained the attention and support of many personal finance bloggers when he launched Financial Peace University.
Suze Orman, on the other hand, now finds herself on the wrong side of the personal finance blogosphere after some writers were critical of a new pre-paid debit card. The card is branded and was apparently developed by the money management expert.
There are a growing number of bloggers who disapprove of the card and Orman’s endorsement of it. Orman reacted by calling these people “idiots” and getting into squabbles over Twitter.
At this point, it’s hard to tell exactly where the fracas started. However, there are some detailed accounts of what went down in the Twitterverse late last week. I suggest you check out 20 and Engaged‘s post on what happened and get the full effect of the Twitter explosion.
One of the most surprising reactions to criticism of the Suze Orman Approved Card came in response to personal finance blogger Phillip Taylor of PT Money.
Phillip Taylor of PT Money
Taylor is also the founder of FinCon, a national financial bloggers conference. So he’s far from small potatoes when it comes to personal finances on the web.
Taylor wrote an article which practically put Orman in the same category as other celebrities who’ve endorse prepaid cards such as The Kardashians and Russel Simmons. Those products were highly criticized, and the Kardiashian sisters even yanked their endorsement after public outcry about hidden fees.
Orman’s card may have less and lower fees, but not low enough to make it worthy of PT Money’s approval. On his blog, Taylor gave three reasons why the card isn’t as great as it is being marketed while questioning Orman’s motives. That means he called her out and said the Approved Card is more of a way to make a profit than to help people.
Taylor also compared the Approved Card’s $3 monthly fee to the proposed Bank of America $5 monthly debit card fee, which you’ll remember, led to a huge uproar from consumers.
Yet Taylor still tried to be gracious to Orman:
“I like Suze, but I don’t like that she has created this card and is marketing it in this way.”
When Suze Orman caught wind of what was being said about her prepaid debit card on personal finance blogs, she let loose. First when asked about the PT Money review she responded:
“…read the great reviews of legit reporters or ones that are smart enough to understand what I am doing. There are many Suze haters”
When blogger 20andEngaged mentioned her disappointment in the prepaid debit card, and retweeted Taylor’s review, Orman responded with this polite little gem:
“Too bad you choose to believe an idiot over me- you just keep following others and see where it gets you.”
Orman repeatedly called any personal finance blogger or Twitter follower who negatively reviewed her card “wrong” while failing to actually defend the product she endorses.
Later she tweeted a link to one of these s0-called legit reporters (aka writers in the mainstream media), Forbes.com contributor Arjan Schütte. He gave the Approved Card a fairly glowing review. However, there are plenty of mainstream sites that are also questioning Orman’s prepaid debit card. That includes NY Times finance writer Ron Lieber.
Lieber, like many others, seemed shocked at the way Orman handled the situation and the insults she dealt out. Suddenly, Orman changed her tone completely. She apologized twice to Lieber, later apologized to “anyone I called an idiot”, and finally apologized directly to Phillip Taylor (after some coaxing from other Tweeters).
Reading it all reminded me of parents trying to get a four year-old to say she’s sorry and actually mean it.
So Is Suze Orman’s Approved Card a Rip Off?
John Wasik of Reuters (which I would call a pretty legit news agency) wrote an excellent column detailing the fees in the Suze Orman Approved Card. Wasik also writes that he knows Orman personally. She even wrote a blurb for a book he authored…
“Yet there’s something troubling about an avowed consumer advocate who plugs a product that charges $3 “maintenance” fees (the first month’s fee is waived) and even restricts deposits.”
Orman is going around touting the $3 monthly fee as a positive thing. The truth is that a typical prepaid debit card will charge $4 to $10 monthly fee. So yes, Orman’s card undercuts the rest to have the lowest monthly fee.
But what if someone else came along and endorsed their own prepaid debit card undercutting Orman?
Let’s just imagine what would happen if Charlie Sheen enters this market. Hey, if the Kardashians did it, why not?
Charlie Sheen’s new Winning Card only has a $2 monthly fee. All of a sudden, Suze’s prepaid card isn’t quite so hot.
Even if Charlie Sheen introduces a prepaid Winning Card there are still much better options out there, and both mainstream journalists and personal finance bloggers are pointing consumers in other directions. The idea behind Suze Orman’s Approved Card is that it can be a money management tool for the unbanked in America. As we noted in a recent post, that’s a growing segment of consumers, which big companies like Walmart are looking to cash in on.
What people need to realize is smaller community banks and credit unions will likely accept the business of the “unbanked” and offer free checking. Plus there are also options for free online checking accounts and rewards debit cards such as PerkStreet or services like Kasasa.
Make no mistake about it…prepaid cards are money-making tools for those who push them – and that means the banks. Yes, Suze Orman’s card is backed by Bancorp. You see, big banks really like prepaid cards because they avoid those new regulations on debit card swipe fees.
Suze Orman is a TV personality who is supposed to help people deal with money issues. Her creation and endorsement of this prepaid debit card has simply left a bad taste in a lot of mouths. Unfortunately for Suze – these mouths have their own blogs.
Besides the $3 month charge, here are some other fees and restrictions that can be found on the Approved Card:
- You must use direct deposit. Fees are charged if funds are deposited using personal checks, cashier’s checks or money orders.
- You will be charged for balance inquiries if you have no direct deposit. No ability to check online
- You cannot use the card at gas pumps, or for making hotel/car reservations.
- You get one free customer service call a month – then it’s $2 per call.
- Requesting paper statements means a $2 fee.
- There’s a spending limit of $2,000 per 24 hours.
Wasik questions the need for a spending limit when the card already won’t let you overspend. If you have the money, shouldn’t you be able to spend it as you wish? Wasik believes Orman’s product makes her seem somewhat hypocritical.
“If Orman ‘hates extra fees,’ as she says in the advertising, then why promote a card that’s loaded with them? I can understand how the fees work as economic levers to keep account expenses down, but these fees often generate profit for the bank at the expense of the consumer. Far too many people don’t read the fine print and pay dearly. “
Speaking of the fine print, Phillip Taylor notes that Orman claims she is trying to change how the unbanked can build their credit without using credit cards. Supposedly, the Approved Card will help you to do so by anonymously providing information to the TransUnion credit bureau. But the fine print states:
“The information we share with TransUnion concerning your Approved Card account will not appear in your credit report.”
My prediction is that Orman will have to pull this card off the market, or at least change the fee structure, otherwise it could jeopardize her reliability.
Your Turn
How do you feel about Suze Orman’s new prepaid debit card?
Does it seem unethical for someone who is a TV personality and respected authority on personal financial advice to get it into selling a financial product? Or is it just good business and smart marketing?
Leave a comment and let us know your opinion!
If you enjoyed this article please share and retweet to your friends!
Image Credits: David Shankbone & Sharon Graphics
+Kasey Steinbrinck writes regularly on personal finances and consumer news for Check Advantage. Visit them today and get free shipping on personal checks. That includes a huge collection of Cool Checks. Contact Kasey to request free content for your website or blog.
Related posts:
{ 6 comments… read them below or add one }
Great write up Kasey (and not just because you included me haha). I think Suze definitely put herself in a situation where she has contradicted herself. I don’t know if she “forgot” what she’s said before about prepaid debit cards or just saw that she could make money from it. I question her motives. Now I wish Charlie Sheen would have actually came out with the “Winning” card haha. That would have been a lot of fun to cover.
Hey Briana – thanks for being one of the people to take a stand.
Who knows what she’s thinking. Did you hear that interview she did on Marketplace after all this happened? She’s still calling people idiots for dissing her card!
http://www.marketplace.org/topics/your-money/suze-debuts-new-show-new-card
The biggest misunderstanding about Suze Orman’s prepaid card, unfortunately stoked up by Orman herself, seems to be the notion that the Approved Card, as it is called, can help its users improve their credit scores. So it’s time we set the record straight: the Suze Orman’s card does not affect your credit score in any way, either positive or negative. Colleen Tunney-Ryan, a spokeswoman for TransUnion, a credit bureau that has partnered with Orman to provide her card’s users with access to their credit reports and scores, states it plainly: “It is important to understand that this data will not appear on any TransUnion credit report at this time.” I think that should settle it. Learn more here: http://blog.unibulmerchantservices.com/suze-ormans-prepaid-card-will-not-affect-your-credit-score.
You’re right Jay.
Orman thinks this card could lead to the ability for prepaid debit cards to help some people build credit. But as of right now – it does no such thing. Thanks for the comment.
Great post, Kasey! Wow, interesting stuff. I’m a big Suze fan. Generally, I think she has great advice and a great perspective. I didn’t pay much attention when I first heard about the card. No interest on my part, but I figured it might appeal to others. This controversy and her handling of the matter certainly don’t paint her in a favorable light!
I think you need to get a cut on that Winning Card when it comes out…that could be huge!
Ha Ha! Thanks Nicole!
As soon as Charlie Sheen’s people get in touch with my people, we’re going to make it happen.
On the topic of Suze – I think many of the PF bloggers felt the same way. They had a lot of respect for her, but apparently the respect didn’t go both ways. That’s not to say all of her advice is bad – or even that her intentions with the Approved Card are 100% selfish. But it certainly has raised some eyebrows!