Suze Orman’s Approved Prepaid Card – Bad Wine In New Bottle

Suze Orman recently launched a prepaid debit card called the Approved Card. Now, I’m not a big fan of prepaid cards in general and prefer debit cards instead, but this coming from Suze Orman, deserved another look.

I like Suze Orman. She does what a very few can do – break down complex financial topics so that the average man on the street can understand. Suze’s advice is quite sensible and her show is definitely worth watching.

This card, like most prepaid cards, is geared towards students and people with little or no credit. With a prepaid card, you can’t get into debt. You can only spend what you prepay. Since this is endorsed by MasterCard, you can use this card where credit cards are accepted and since this is a prepaid card, no credit is issued, but you get fraud protection from MasterCard on your purchases.

To understand the nuances of signing for purchases as opposed to using a PIN, read my post: Should you sign for a debit card purchase or use your PIN?

This card does have some features not found in a normal prepaid card like free identity theft protection and free access to your credit score.

But is this card worth signing up for? Let’s find out!

Suze Orman's Prepaid Card

9 Purported benefits of using the Approved card

The promotional page for this card lists 9 benefits of using this card. Let’s go over each one of those points. I’m going to compare the Approved card with a Debit card. I’ll use a debit card from Ally Bank since that’s the one I’m most familiar with.

1. Stay Debt Free
With the Approved Card (or any prepaid card) you can’t get into debt. If you don’t opt-in for overdraft protection with a debit card, you can’t get into debt either.

Both require funds to be available in your account before you can spend it. But since Ally Debit card is backed by a checking account, and since Ally pays interest on its checking account, you earn interest on your balance. With the Approved card you earn 0% interest.

2. Safer Than Cash
From the website: “If your Approved Card is lost or stolen, your money can be replaced under the MasterCard Zero Liability policy (conditions and exceptions apply—see The Approved Cardholder Agreement).”

If you are familiar with fraud liabilities, you’ll realize that there is nothing new here. Electronic Fund Transfers are governed by Federal Reserve’s Regulation E.

  • If you report a lost or stolen card within two days, you are liable upto $50.
  • If you report it after 2 days, you could be liable upto $500 and
  • if it has been 60 days since your card was lost or stolen, you could lose your deposit.

I actually went through the cardholder agreement for the Approved card and it pretty much aligned with the above. But then how can they say ‘MasterCard Zero Liability policy’ if you can lose upto $50?

Here’s a little blurb from the fine print:

“This reduced liability does not apply if a PIN is used as the method of verification for a disputed transaction”.

If you use your PIN, you do not get the benefit of zero liability.

No, Suze Orman is not trying to be sneaky here! This is standard for any Debit or Prepaid card endorsed by either VISA or MasterCard. Please read my post on why this isn’t a surprise: If You Bank Online, You Need To Do This, Pronto!

When you sign for a purchase, your purchase is protected by your card provider, in this case MasterCard which on top of Federal Reserve’s Regulation E, also offers zero liability. When you use a pin, your purchase is protected by your bank which usually follows Federal Reserve’s Regulation E and hence no zero liability.

3. Free TransUnion Credit Scores, Reports & Monitoring
With the Approved card, you can check your credit score once you pay the monthly account maintenance fee of $3. With Ally’s debit card, there is no account maintenance fees, but Ally doesn’t provide credit scores either.

Now here’s the catch. TransUnion scores are not FICO scores. FICO score is the score that matters the most when you apply for a loan, not TransUnion Credit score.

Now, if you must, you can get this score for free! Here’s how:
Sign up for CreditKarma.

Credit Karma provides TransUnion credit score for fee. No credit card is required to sign up.

To find out how to get all three credit scores for free, read my post: How to get your credit scores from all three bureaus for free

4. Free Identity Theft Protection
With the Approved card you get free ID theft protection from TrustID. CreditKarma now offers free ID Theft protection from TransUnion if you opt-in. No fees for this service either.

My Review of Credit Karma

5. Set Up An Emergency Fund
The Approved card has this unique feature where you can set aside money which will not be a part of your prepaid balance. Sort of like a savings account without earning you any interest! With Ally, you can create additional accounts for your emergency funds, all earning interest.

6. FDIC Insured
Your prepaid balance is federally insured upto $250,000. You automatically get this protection with any bank account, not just Ally’s.

7. The Credit Project
When you make use of a debit card, your purchase and payment history is not reported to credit bureaus. Which means, your exemplary payment history is not reflected in your credit reports or your credit scores.

So, does Suze’s Approved card report your transactions and history to credit agencies? Report yes, will it have an impact on your credit scores or reports? No!

When you opt-in, you are basically agreeing to send all your purchase and payment history to TransUnion! Companies will pay big money to get their hands on data like this. With the Approved card you are agreeing to give this data for free. How is this helping the card holder?

8. Low Monthly Fee
For the privilege of using your money, you’ll have to keep paying a fee of $3 every month. With Ally’s debit card, there is no fee, no minimum balance requirements either.

9. Teach Your Teens Financial Responsibility
You can order three add-on cards with your Approved card for a one-time fee of $3 per card! I can do this for free with Ally by creating joint accounts. I get the same benefits without the extra cost.

Other Fees With Suze Orman’s Approved Card

Card Purchase Fee: $3
Monthly Fee: $3
ATM Withdrawal Fee: $2
ATM Balance Inquiry Fee: $1
OTC Withdrawal: $2
Paper Statement Fee: $2 per statement
Bill Payment Fee, Paper Check: $1 per check
Customer Service: One per month free, $2 thereafter per call

The Same Services With Ally Bank

Card Purchase Fee: Free
Monthly Fee: $0
ATM Withdrawal Fee: $0
ATM Balance Inquiry Fee: $0
OTC Withdrawal: $0
Paper Statement Fee: $0 per statement
Bill Payment Fee, Paper Check: $0 per check
Customer Service: Free

Let’s calculate the true cost of Suze’s Approved card. Let’s say you make 2 ATM withdrawals and 2 bill payments a month using this card. That will be $9 in fees alone every month which works out to $108 a year!

One other feature touted in the site is free money transfer between Approved card holders. With Ally’s PopMoney service you can transfer money to anyone with an email id or a phone! Absolutely no fees.

My Thoughts
For the people this card is targeted for, I think the Approved card is a very bad deal. As I’ve shown you in this post, all the benefits that this card provides can be had for free if you know how.

If this card were from the Kardashians, I understand. But coming from Suze Orman, I expected this to be revolutionary.

I was quite disappointed.

Suze Orman Photo by David Shankbone

53 thoughts on “Suze Orman’s Approved Prepaid Card – Bad Wine In New Bottle

  1. No Suze Orman cards for me….. or books, or TV shows, etc. Not impressed.

    • The card is definitely a let down. With so many fees I don’t know how this will help someone just getting started financially.

    • wow – I am so not impressed with Ms. Orman’s latest gimmick. I agree that she is very skilled in presenting complex personal finance issues – but at the same time I can’t stomach her over-the-top pesonality, she’s off-putting. This pre-paid card is another example of how everybody is in it for themselves, and that endorsing/selling products trumps proper consumer advice. Thanks for writing this post!!

  2. Nice analysis of why her card is not the way to go. Like you I am impressed at her ability to explain some complex subjects. I’m am most impressed, however, at her self promotion ability.

  3. Sounds like another lame credit/debit card being marketed to a certain crowd. Do students or people with little or no credit even know who Suze Orman is? Maybe they’re expecting parents to convince their kids it’s a good idea.

    It seems like the best cards (or even banking products in general) out there don’t always get a fair shake since they’re probably less profitable to the companies that provide them. That’s a shame.

    Hey, still can’t beat that Kardashian card! :)

  4. Maybe I’m missing something, but isn’t the Suze Orman card designed to build credit for those with little or negative credit history? I know that debit card transactions don’t report to a credit bureau, but credit card payments are reported to credit bureau’s which help build a credit history. Even pre-approved cards report payment history and that can help improve a person’s credit.

    You have a good point of the pros and cons, but I think the point of the the prepaid Orman card is that a person with little or no credit history (or damaged credit) can begin rebuilding credit with this card. No?

    • LH, the wording is very clever and seems like it would. But here’s what the fine print says:

      “The Approved Card is not designed to improve your credit record, history, or rating. Use of The Approved Card will not and cannot improve or fix your credit score or rating.”

      If you opt in to share your purchase and payment data, the data is shared anonymously. If it is anonymous, it can’t help build your history, can it now?! :)

  5. Very true Philip. Very deceptive marketing and not in the best interest of consumers.

  6. Great analysis! I love the side-by-side comparison of the fees and lack thereof depending on the choice you choose.
    Suze is VERY likable and connects with her audience; I do think you are being generous in your commentary, which is very laudable and mature. I’m not a fan of this particular deal for the reasons you stated and my personal bias against CC in general. There I said it. Cheers!!!!

  7. This is outrageous. I can’t believe Suze has put her reputation behind it. Just another sellout. What a disappointment.

  8. This is the first I had heard of it, but it is really a terrible idea. You are right to have expected more from a “financial guru”. Seems like the almighty dollar is interfering with ethics.

  9. Suze Orman has done a lot of good. A fee based prepaid card does not fit in that category. Pay cash instead! Or get a no fee debit card from a bank.

  10. I was pretty disappointed as well. I expect a Kardashian card to be all about fees but not from someone who advises you to stay away from fees.

  11. Great article. I like the way you make the comparisons. (You’ve also helped sell me on Ally)

    I’m adding this post to my list of reactions to Suze Orman’s card.

  12. There doesn’t seem anything special about this card. A CC is a CC. I use my visa for everything and pay it off in full every month.

  13. I’m disappointed that Suze sold out on this. She could have done so much better by using the card for good: some people have such bad credit that they cannot qualify for a checking account. This subset is what these types of cards were made for; people who want the ease of a debit card but can’t qualify. What Suze should have done was partner with a bank or something to make the card activity reportable to credit companies. Then the card owners can build credit as well, and this would be worth some of her hefty fees.

  14. Nah! I won’t go for this one. A credit card can earn you money and I have no problems with paying a CC every month so, I would rather earn money from my cards rather than paying a monthly fee.All the good features you mentioned are allreay available on Credit cards.

  15. I loved following the drama on Twitter last night where she called dissenting voices “idiots”. Granted, she apologized today, but holy crap. For a TV personality of that stature? Seems a little defensive; wonder why?

  16. I’m disappointed in Suzy… she encourages people not to pay bank fees and look at all the fees associated with her card. Apparently, it’s all about the money, quite sad. :(

  17. That was a very good breakdown of the costs comparisons with your Ally card. I think of more concern is that this card is being pitched to the masses, rather than the very small niche for which it would be useful. So not only does it pelt the user with unnecessary fees, but most of those users probably have no use for it in the first place.

  18. Oh man, that card has tons of fee. There is no way I would saddle anyone with one of these. It’s disappointing that she is pushing this crappy product.

  19. It seems I’ve read a lot of articles on this lately, all with a general sense of how crazy it is. Let’s face it… most people are helping us with our money because it makes them money!

  20. Another excellent article about the drawbacks of her Approved card. One of my biggest issues with her card is the disingenuous way she has portrayed it as a way to build credit. She is trying to capitalize on people desperate for a way to obtain credit, improve their finances, etc. Overall, she is akin to a snake oil salesman.That sounds harsh, but she really angered me when she attacked the pf bloggers who only try to help people, not line their pockets.

  21. Im upset up the fact that she thinks her audience is not smart enough to be able to spot a bad deal.

    Great analysis.

  22. Looks like Suzee has her niche market figured out. People with no credit and a short TV attention span.

  23. This bodes extremely poorly for Suze Orman. She gives great advice—and then promotes an overpriced credit card. How hypocritical! Thank you for your excellent breakdown. It is good to be enlightened.

    The best result of this whole fiasco would be if Suze would lose her credibility with the masses. For knowingly pitching an overpriced piece of plastic to her adoring, ignorant fans; she is knowingly giving terrible advice. She should lose her position. Unfortunately, this will not happen.

  24. A little bit of product comparison really does pay off. I hadn’t looked into Ally’s card before, thanks for the info.

  25. The pf blogosphere is full of criticism of this card. I agree that it’s a poorly marketed card, it doesn’t fit well with Orman’s presumed fan base.

    But, there is a case to made that these cards have their place. There are millions of people who are unsophisticated in finances or who do not have enough money to be able to afford the lower cost bank accounts. This card and other like it are filling a need that is growing: the transition to a cashless society.

    If you have a bank account with limited resources, you have to traverse the landmines of hidden and excessive fees. On paper these bank accounts are “free” or low cost but the reality is banks make money by fines and fees.

    This debit card doesn’t have this issue. You know what the costs are ahead of time because they publish them upfront.

    Also, take a step back and think about an institution that is providing service (a card, access to networks, support, online access) for customers with presumably low assets. Should they get it for free? Absolutely not, the bank or institution have every right to charge for a service that they are providing.

    There is no free lunch.

  26. It’s incredible that Suze Orman can promote card that she won’t sign up for herself.

    BTW, I linked your article in my latest article,

    I simply love your blog. It’s outstanding!


  27. Terrific review MC! Looks like Ally is a pretty great deal. Surprised Suze is going the way of the Kardashians. What is this world coming to?

  28. Wow I had no idea she was branching into this type of business. I wonder if it was Master Card’s or Suze’s idea first to do this prepaid card deal. The fees should be a big red flag for their target clients so hopefully people will read the fine print before they go out and sign up! -Sydney

  29. clarence thomas says:

    I think charging fees for all transactions are crazy,clarence.

  30. Loved this post because it finally described all details of that unfortunate card. I like Suze for the same reasons as you do. I was somewhat shocked when I found out what she came up with. What was she thinking?

  31. Unfortunately, this is far too often what happens when Hollywood, fame and money get in the way of values and beliefs.

  32. I was unimpressed too. Mostly from my own experience. I didn’t get into debt until I was in my 30′s. I was frugal and didn’t spend what I didn’t have. At some point I bought into the myth that I needed to spend money to make money and the debt followed.
    A debit card would not have helped…a savings account would have ;)

  33. Remember…she, like all others, is trying to make money.

    Now, that is not a bad.

    However, I think she is using her public financial status to “corral” the sheep and the ignorant that will always follow their “idols” blindly.

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