Suze Orman’s new card – not such a good deal

ATM withdrawal fees. Monthly maintenance fees. Fees to speak with live customer service agents. A new prepaid card unveiled today comes with the same fees that have accompanied these cards for years – only this time it’s not being marketed by big banks but by TV celebrity Suze Orman.

Prepaid cards allow cardholders to deposit money into an account and to draw on those funds for purchases or cash withdrawals. They’re largely used by consumers who want to avoid going into debt with a credit card and by teens and young adults as a way to learn how to manage money. But prepaid card fees can quickly eat into a cardholder’s balance, and the so-called Approved Card From Suze Orman that’s issued by The Bankcorp Bank is no exception, say experts: It includes a $3 purchase fee to get the card, a $3 monthly account maintenance fee, up to $2 for each ATM withdrawal and as much as $2 to speak with a customer service agent.

“It doesn’t do much to separate itself from the pack,” says Odysseas Papadimitriou, chief executive at CardHub.com, a credit-card comparison site that also studies prepaid cards.

For her part, Suze Orman says she set out to develop an affordable prepaid card. True, the monthly fee is lower than the average $4.56 monthly fee charged by prepaid cards, according to CardHub.com. And in a conference call today, Orman says cardholders can avoid ATM fees by making a deposit of at least $20 per month to their prepaid card and withdrawing strictly from ATMs in the Allpoint network, which has over 35,000 locations. She adds that some of the fees — like the monthly maintenance fee — couldn’t be avoided because of rules and regulations.

Orman says the card also helps cardholders make smart decisions while spending. For example, when consumers make a withdrawal from an ATM outside of the Allpoint network, they’ll receive a text from Orman asking why they’re wasting money on fees, which can range between $1 and $2 per withdrawal. Separately, as consumers use the card for purchases and other activities, they’ll receive email or text updates on their balance.

But once again, there is little reason for consumers to go through all this hassle, say consumer advocates. There are plenty of debit cards that are free and easy to use. For example, you’d likely be better off by opening a checking account with a credit union and getting a debit card issued, says John Ulzheimer, president of consumer education at SmartCredit.com, a credit-monitoring site. Orman says her prepaid card can be used an alternative by consumers who aren’t happy with their bank.

And consumers who opt for a prepaid card could be better served with an alternative option. For someone who receives a monthly paycheck of at least $2,000 and uses the ATM at least once a week, the Green Dot Gold Prepaid Visa card comes out to $0 a month, according to a study by CardHub.com.

Sizing Up Suze Orman’s New Prepaid Card