“I am the personal financial expert of the world” Photograph by Shahar Azran/Polaris
“I love you!” a woman yells as personal finance guru Suze Orman enters the drab conference room at a Barnes & Noble in suburban New Jersey. Fans cheer and clap while a man in the front row tears up from excitement. Orman is here to preach the tough-love brand of financial advice that she’s been peddling for more than a decade through nine bestselling books, a highly rated CNBC show, and regular appearances on the old Oprah Winfrey Show. “You have got to be the masters of your own financial future,” she tells the 200-strong crowd. While the event coincides with a new paperback edition of her 10th book, The Money Class, that’s not the main focus of her talk. “You need more than books,” she says. “Now you need the tools.”
Orman has a particular tool in mind. Just a few days earlier she introduced her first financial product: a prepaid debit card emblazoned with her name. She sees her Approved Card as an alternative way for people who are fed up with—or don’t have—traditional checking accounts and credit cards to manage their cash. And if the most ambitious part of her plan succeeds, the card may eventually help users improve their credit scores.
Orman’s Approved Card, issued by Wilmington (Del.)-based Bancorp Bank, is in part designed to play the role of pestering mom. The basics are simple: People use electronic transfers or cash to load money onto their cards, then use them like regular debit cards, buying groceries or shopping online. The Orman touch comes in such features as automatic text message alerts sent to mobile phones that note the balance remaining on the card after each purchase. The card’s website has Orman issuing such sharply worded reminders as, “Before you make a purchase, you’d better be able to afford it—do you hear me?!”
Prepaid cards are the fastest-growing payment method, Federal Reserve data show. In 2010 people used them for $65 billion in transactions, compared with $48 billion in 2009, the industry newsletter Nilson Report says. Part of the cards’ appeal is that you can’t get into debt with them. “I think it’s a good idea to have a prepaid card rather than going out willy-nilly with a credit card,” says Glinda Kidd at the book signing.
Still, prepaid cards often come loaded with fees—and Orman’s is no exception. It has a standard $3 monthly charge. While there’s no cost to reload the card with direct deposits or automatic transfers from a checking account, people must pay up to $4.95 to put cash on the card at Western Union or MoneyGram locations. And if they load with cash rather than electronically, all ATM withdrawals cost $2. One free call to a customer service rep is included each month; extra calls are $2 each.
“What people don’t understand is the cost to do business,” says Orman in an interview. “If I could have given this to you for free, I would have.” Orman, who says she invested $1 million in the venture, declines to discuss how much money she might make from it. And she vows to train customers to keep their costs down. In videos on the card’s website, she explains the fees, warning that people who load their cards electronically can get cash from one of the 35,000 ATMs in the Allpoint network for free but will incur a $2 charge for using other ATMs—plus whatever fee the ATM operator imposes. “Why would you want to waste money like that?” she says in the video. “Don’t be lazy, and go to an Allpoint ATM.”
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