Be Wary of Celebrity Debit Cards

Well-known public figures, such as financial advisor Suze Orman and the Kardashian sisters,  have begun marketing their own prepaid debit cards, which promise people with bad credit access to instant cash.

According to the Wall Street Journal, celebrity-sponsored prepaid debit cards may pose unique dangers for consumers, due to the unreasonable fees that are being charged for using the cards. Prepaid debit cards launched by, among others, the Kardashian sisters and hip-hop king Russell Simmons ended up costing more than they were worth. The Kardashians withdrew their cards from the market after consumers discovered ridiculous fees, including an $8 monthly maintenance charge. Even Orman's recently-launched prepaid debit card has fees that can add up quickly (Orman says there will be a $3 activation fee, a $3 monthly maintenance fee, and a $3 charge for every call to a customer service representative).

Industry observers claim that these fees will still squeeze money from people who use the cards, ultimately resulting in a financial loss for low-income consumers. While it is true that having a prepaid card can help folks improve their credit rating or help to establish credit, no one should sign up for a new debit card simply because it is offered or endorsed by a celebrity.

A far better practice would be to find a local bank or credit union that offers a low or no fee account with a debit card attached to the account. For those who cannot open a regular bank account due to bad bank credit, some of the big national stores are offering pre-paid debit card accounts that have much lower service fees than the celebrity cards. Be sure to compare prices before signing up for any of these cards, even if it takes a minute or two to go over the fine print on the back of the packaging containing the card in the store.

When it comes to managing your money and your credit score, be a smart consumer and don't let the celebrity images sway you into making a bad financial decision.

About the author: Dan Cooke