Despite Suze Orman’s Claim Prepaid Debit Cards Still No Good

New Orleans    Suze Orman has made her reputation as a TV financial advisor.  Now she wants to promote a debit card for low-and-moderate income families who have weak credit and want the ability to operate differently.  Her Approved card needs to be renamed as the Improved card, but it’s still not a good card, or at least not good enough for these times and this constituency.

Ron Lieber of the Times offered a helpful analysis of Orman’s new entry into this market and its impact on citizen wealth, but despite the fact that he seems to be bending over backwards, “vaporware,” as he calls the claim that credit giant TransUnion will actually use this data to qualify a customer for a real credit card, still seems to be the wrapping for this whole card.  A prepaid card is exactly that, a card where one a customer turns over cash in order to spend that cash with plastic rather than cash.  There have to be very good reasons for doing that, because, cash involves no extra fees, and these celebrity cards still cost money for questionable returns in a market that makes no sense unless it repairs credit or qualifies the consumer for something bigger and better.

Back with ACORN our team met extensively with Russell Simmons about his Rush Card.  We loved Russell and he had been a great friend, especially to New York ACORN, but the rap master had produced a rip card.  Promises were made and improvements were implemented, but the card still sucked, and it’s still sold in low-and-moderate income neighbors everywhere.

Orman will be moving on some other streets but it’s the same hustle it looks like to me with regular maintenance fees and transaction fees, even though there are ceilings that prevent going past the limits and some credit reports and credit reviews even though it is sound and fury signifying nothing.

If the point is something more than making money for Orman and friends, then what is the point of this for consumers.

None that I can find, and until then, if you have a little bit of cash, keep it in your pocket, rather than paying someone else to spend it for you.


Credit Card Rips

credit-cards_69New Orleans There is a lot of talk about reforming credit card fees and rates, but a lot of this seems just that:  talk.  The House Financial Services Committee chaired by Barney Frank has talked about capping rates, but also seems powerless in the wake of many companies (including my own Union Privilege Card offered by HSBC to the best of my knowledge!) raising the fees now ahead of any bill passage.  That’s clearly wrong.

There’s a lot of this hustle-bustle going on.  Floyd Norris made a good point about a month ago in a NY Times column about the poor subsidizing the rich when it comes to credit cards.  Not surprisingly that angle caught my eye immediately.  His point was that even though the stated price for certain items is the same (and required by law to be the same), whether we use cash or a credit card, the poor or working stiff without a credit card is laying down cash, while some of the better off are using a card, which gives the retailer less, and in some cases gives them mileage or credits back.  It’s only gas stations were over my lifetime I’ve seen a real discount for use of cash.  Norris reports, undoubtedly correctly, that the card companies, retailers and others are crying like stuck pigs and wallowing in the water to muddy it up sufficiently that it’s hard for any of us to tell what might be the best reform and whether or not the poor Joe Consumer will get a break.

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