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January 11, 2012

Suze Orman gets into the prepaid card game -- and out of the good graces of the CU Industry?

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by Ron Daly 

 Remember a while back when Suze Orman went to bat for the NCUA as an "educator"? She wanted to get the word out about how NCUA served the same function for CUs as the FDIC did for banks. A noble goal, and helpful for those who are confused about what all those letters mean on the bottoms of loan promos and direct mail pieces. It raised the question, "Is Suze Orman the right spokesperson for CUs?" 

Well, it's a false dilemma, really. See, Suze Orman wasn't hired to promote CREDIT UNIONS, she was hired to promote NCUA and their capacity as the insurer of cu deposits. But people read "Suze Orman" and "NCUA" and interpreted that as "Credit Union Spokeswoman".

Which is unfortunate, because Suze Orman just decided to set herself up as a prepaid card magnate. Click here to read about it on US News and World Report's website.

I really don't know how to make heads or tails of this. Sure, Suze Orman has a lot of brand equity, specifically with the "underbanked", but to lend that equity to a prepaid card? She's taken the road the Kardashian sisters weren't able to walk a little over a year ago; the only difference being that Orman actually seems to understand how money works and the Kardashians...well, the less said, the better.

An Associated Press story claims that the aim of the card - which Orman has (reportedly) already pumped $1 million of her own money into in development costs -  is to boost the credit scores of users through a deal with TransUnion. This new breed of credit score would reward users who previously paid for things with cash or other prepaid cards, but Business Insider doesn't seem to think so.

According to the PR Newswire press release, the card comes with "Suze Orman's advice and tips on personal finance," (which are delivered...how?) and is also "insured up to $250,000. The Bancorp Bank; Member FDIC". So, there's a bank involved somewhere along the line, but a few steps removed...

I guess the question is, has this move soured your opinion of Suze? Some of the choice tweets on the topic I read over yesterday and today: 

Screen shot 2012-01-11 at 12.53.15 PM

Yes, much has been made of the $3 monthly fee, which is actually low compared to cards like the Kardashian Kard. But a card that preaches better finance management while taking out $3/month to "cover costs"? Would "Pre-Card Suze Orman" approve of that? 

Screen shot 2012-01-11 at 4.12.06 PM
Ron Shevlin from the Aite Group always has great links and thoughtful reads on the topics of the day, and he found one by Ron Lieber in the Times. In it, Orman swears she won't be making much money on the card and certainly doesn't want to be making money off of the "99 percent's backs" (her words). She insists that if the rates increase dramatically, she'll kill off the product. But surely there's some reward for her, considering how much she's already invested...what is it?

Screen shot 2012-01-11 at 12.55.22 PM

This reaction is one of the more damning, in my opinion. Ondine Irving has worked with Suze Orman in the past to get the word out about credit union credit card programs and has been a pretty big Suze Orman "stumper". She's not happy with these new developments. I sense she won't be the only one. 

I'm eager to hear your comments on this in the comment section. 

 

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The entire situation is very unfortunate- the rollout has been mishandled, Suze's reputation, motives and credibility has been questioned, consumers who trusted her and expected more from Suze feel duped, mixed messages regarding her loyalty to business partners (TransUnion, FICO, Trusted ID, Credit Union Cards, etc). You make a GREAT point that Suze knows finance so very well- and raises the question as to the motivation for this product- and we are all entitled to our opinion on that one.

I stand by opinion that this is not a good deal for consumers or credit union members- specifically since credit unions are the BEST at fostering financial relationships with ALL member types, including those that need help. That is where debit card/free checking and secured cards come into play. I have never been a supporter of Prepaid Cards for credit unions to offer as a transactional/checking account substitute- mainly due to the expense to implement- and fees undoubtedly being passed on to members to make the program worthwhile- so no matter who is issuing the Prepaid Card, I can almost guarantee I won't like it. Nothing personal.

Twitter for Suze has not been friendly the last 24 hours, as her comments regarding some PF bloggers and NY Times financial journalist, Ron Lieber and referring to them as "idiots" only further makes these problems for Suze more evident. People are asking for answers- as to why, why, why? Time will tell- and hoping for SUze's sake this turns out OK in the end.

Suze Orman's card is not a bad prepaid card, but it is nothing more than that either. It is not even the best prepaid card out there, as that distinction belongs to American Express' prepaid card, which comes with no monthly fees at all.

But what really bothers me is that Orman advertises her card almost like the solution to all of your financial problems, provided "you use it how I tell you to." The thing is, if the "unbanked," who constitute the vast majority of prepaid users, were always doing what they were told with their finances, they would never have been cut off of the banking system and come to rely on prepaid cards in the first place. http://blog.unibulmerchantservices.com/why-suze-ormans-prepaid-card-is-a-non-event

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