There’s been a bit of a ruckus with the release Suze Orman’s pre-paid debit card — the Approved Card.
Her card joins other celebrity cards such as the Rush Card and the Kardashian Card.
The problem, many claim, is that pre-paid debit cards come with fees to use them. With Suze’s card, people are claiming that she is just profiting from her audience.
I’d like to show you an alternative to pre-paid debit cards. In fact, I’m going to show you how to make your own pre-paid debit card!
First though, let’s go over what a pre-paid debit card is.
What is a Pre-Paid Debit Card?
Basically, a pre-paid debit card is a card that you put money on to spend with, almost like a gift card. The card isn’t typically attached to a bank account, like a standard debit card is.
It’s typically used by people who don’t have checking accounts, don’t want to use credit cards or cash, or to give to someone so they can only spend a certain limit (like giving one to your kid in college).
It can be one way to control your spending and make sure you don’t go over budget.
But with the use of the card there typically comes a number of fees, some which can be: cost for the card itself; monthly usage fee; fee for not keeping a minimm; fees for checking your balance at an ATM; fees for calling customer service; general ATM fees; and more.
A pre-paid debit card can have its uses but there are ways to achieve something similar without the fees.
How to Make Your Own PrePaid Debit Card
- Deposit ONLY what you can budget to spend with the card.
- Use card for purchases without the fees of a prepaid debit card.
- If you run out, stop spending until you can refill the card again (when it fits your budget).
There you go, your own prepaid debit card!
And with an ING Direct Electric Orange account you get no fees*; no minimum deposits; free ATM use at over 35,000 locations; awesome customer service; free bill pay; they will mail out checks for you; and more.
(*for the most part there are no traditional checking account fees and there are certainly less fees than pre-paid debit card have.)
Yes, I know, you need to open up a bank account. I admit I’m cheating a bit when I say you can make your own prepaid debit card.
But if you plan on using any substantial amount of money for more then one time then you really should have one.
A prepaid debit card is useful to some. But you need to understand the fees that are attached to most of them.
If you can open up a bank account, like a great free online checking account, then you have so many more benefits than a prepaid card can offer.
But I Don’t Want to Spend Too Much
I hear you. A credit card can be wicked tempting. I’ve had my share of credit card debt.
But why are you afraid of spending too much?
Habits are hard to change, for sure, but in the long run you need to understand your spending and get a grasp on it. Avoiding it will only work for so long.
Suze Orman’s The Approved Card
So that brings us back to Suze’s pre-paid debit card.
The Approved Card costs $3 to buy. After that there is a $3 per month account maintenance fee, which is waived the first month. ATM withdrawals at an Allpoint location is $2 (waived for 30 days with a direct deposit). If you need to call customer service your first call is free. After that your call is $2.
There are more fees you can check out on the Fees page.
What differentiates the Approved Card from other prepaid debit cards is that this card is part of an initiative that will anonymously report your spending activity to TransUnion®, one of the three credit bureaus.
See, an issue with using debit cards for purchases, rather than credit cards, is your activity isn’t reported to the credit bureaus so you can’t build credit with them.
You still won’t build credit with the Approved card though.
The initiative to report spending activity will go on for 18-24 months. After that TransUnion will determine if it makes any sense to use the card’s spending activity in credit reporting. So it will probably take about two years before anyone would benefit from this IF it is even determined it should be used in credit reporting.
The card also gives its users a free TransUnion credit report with unlimited updates as well as free identity theft protection from Trusted ID®.
These are certainly interesting additions. But how useful are they really for a person who doesn’t have a bank account and isn’t using credit cards? I wonder. Your card usage doesn’t help your credit score so what are you really monitoring score-wise?
Anyone can use a number of free credit score sites to get a credit score and monitor how their score changes. Keep in mind, the Approved Card doesn’t give you your FICO score, which is what most lenders use to determine a potential loan.
If you need a pre-paid card for limited use then a prepaid card has its place.
But if you need a debit card for long-term use, why not get a checking account? If you want to limit your spending then you can set up an online checking account that only has a limited amount of money.
You can get your credit score for free without getting a prepaid debit card, so while that is an interesting feature of a card, it shouldn’t be the reason you get a prepaid debit card.
What do you think of making your own prepaid debit card? What about Suze Orman’s new card?
I’d love to hear your thoughts. If you use prepaid debit cards I’d love to hear from you too!
Here are some other takes on Suze Orman’s Approved Card:
Suze Orman Launches Pre-Paid Debit Card, Talks Life Lessons
Suze Orman to Offer Her Own Prepaid Debit Card – NYTimes.com
Personal Finance Guru Suze Orman Offers Prepaid Debit Card | Moneyland | TIME.com
Sorry, Suze Orman’s New Prepaid Debit Card Won’t Rescue Your Credit – Business Insider
Suze Orman’s “Approved Card” Gets Denied; Thinks PF Bloggers Are Idiots | 20 and Engaged
Suze Orman Pre-Paid Debit Card: Can We Afford It? #DenySuzeCard – Girls Just Wanna Have Funds
Suze Orman’s Approved PrePaid Debit Card: Bad for Consumers! | The Debt Princess
Suze Orman’s Card is Not Approved by Me | Thousandaire
Suze Orman’s Approved Prepaid Card Reviewed | MyBankTracker.com
Suze Orman Shows True Colors With Her Approved Prepaid Debit Card