There's been a pretty strong backlash against personal-finance guru Suze Orman for daring to attach her name to a prepaid card, even though the card's monthly fees are more in line with the low-end one offered by Wal-Mart than the VIP-only Kardashian Kard.
Shortly after Orman's card was
But perhaps the problem here is not one of attitude, nor of a respected authority abusing her influence. Perhaps the real issue is that to those of us with bank accounts, prepaid cards will never make sense.
Orman's prepaid card, like nearly all prepaid cards, carries fees. As bank customers,
Because we are so committed to this method of handling our money, these fee-laden prepaid cards look like a bad deal. Having such visible fees, even if they're low, is an alien concept. It's like wearing your underwear on the outside. It just isn't done.
And from this perspective, we never understand how an underbanked person views prepaid cards. In their eyes, these cards look great. They even look honest.
No story illustrates this better than a 2009
"I don't have to worry about an overdraft fee here" at the check-cashing store, he told NPR. "I don't have to worry about overdraft protection. I don't have to worry about whether this is free. I know what I'm paying; it's the same every time I come here — and maybe that's something banks should look into."
The audience for Orman's card, or for any prepaid card, doesn't care that it's more expensive than a bank account. The cards earn users' trust by being open about their fees instead of surprising them with overdraft charges.
Perhaps this is why someone like Russell Simmons, the music mogul behind the RushCard, can get on his Twitter account to voice his support for the Occupy Wall Street movement and, the same day, tell that audience that he charges them each
To his audience, that's not predatory. That's honesty. And as Walker said, maybe that's something banks should look into.
Daniel Wolfe is an editor for risk management and technology at American Banker.