Credit Card Companies Teaming Up with Celebrities to Offer Prepaid Debit Cards
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But they don't come cheap.
Financial Guru, Suze Orman, is the latest celebrity to jump into the prepaid debit card swimming pool. And she may be getting into the water just in time. Prepaid debit cards are predicted to achieve double-digit growth annually through 2014, according to Aite Group, an independent advisory and research firm.
Orman, who is an author, financial advisor, motivational speaker, and CNBC televsion host, has launched The Approved Card from Suze Orman. Orman's card is tied to the MasterCard (NYSE: MA) network and is issued by The Bancorp Bank (NASDAQ: TBBK), which releases its next earnings report on January 23, 2012.
The card doesn't come without a number of fees. There's a $3 activation fee, along with a $3 monthly fee. In addition, there's a $2 ATM transaction fee in certain circumstances. Oh, and there's a $2 fee to speak to a "live" customer service agent after your first free monthly call. There's no charge to speak to a machine, however.
Despite the fees, Orman believes her Approved Card will help some build their credit history and improve their credit score. Users of her Approved Card get free access to their credit reports, in hopes they'll keep a better eye on their credit.
Orman's re-loadable card could give the widely popular Walmart (NYSE: WMT) MoneyCard competition, since the fees are strikingly similar. The Walmart's card also has a $3 activation and monthly fee, along with a $2 ATM transaction fee, but is available on both the Visa and Mastercard networks.
Other Celebrities Prepaid Debit Card Involvement
Orman isn't the only celebrity involved in the growing prepaid debit market though. Rapper Lil Wayne launched his own prepaid card, called the Young Money Prepaid Card. His card is tied to the Discover (NYSE: DFS) network, and has higher fees than Orman's Approved Card; it has a $6.95 activation fee, a $3.95, and a $2 ATM transaction fee in some cases.
The MYSPLASH Teen Prepaid card, also on the MasterCard network, is issued by University National Bank. The MYSPLASH prepaid debit card feature teen trends, such as "The Twilight Saga: Eclipses". There's no activation or purchase fees on this card, but there is a monthly membership fee of $4.95 as well as reloading fees.
On the Visa (NYSE: V) network, the Rush Card is inspired by Russel Simmons, hip hop entrepreneur, who some consider the pioneer of the celebrity prepaid debit card. There aren't any fees to add money to the Visa Rush Card, but there are various monthly fees and transaction fees, depending on the plan you choose.
Prepaid debit cards are often used as a substitute for a credit card or as a money management teaching tool, particularly for young spenders. They also provide a new and growing market for financial services companies.
Fool blogger Liz Magill does not own shares in any of the companies mentioned in this entry at the time of publication.