Jan. 9, 2012
Suze Orman, the television crusader for personal financial responsibility, today announced she has helped create a network branded GPR prepaid card. Published reports say Orman not only has lent her name to the product and helped develop the features, but has also invested more than $1 million of her own money into the venture.
The main differentiators between The Approved Card from Suze Orman and another prepaid card backed by celebrities (specifically the short-lived and widely criticized Kardashian Kard) are the low fees ($3 purchase price and $3 monthly fee) and free cardholder access to their credit scores via a partnership with TransUnion.
And, while the Approved Card, issued by The Bancorp Bank, does not offer a line of credit or market itself as a way for underbanked consumers to build credit, Orman is working with TransUnion to determine whether prepaid card transactions could be useful to the credit bureaus in scoring thin- or no-file consumers. The Credit Project will share anonymous transaction information of cardholders who opt in with TransUnion.
“None of this information has anything to do with a [cardholder’s current] credit score,” Orman said in a conference call today with reporters. “But over the next 18-to-24 months, TransUnion—and I hope the other credit bureaus join in this—will be evaluating the information they have, in terms of what’s happening on this card and can it predict future behavior. My hope in doing this is that in two years we will have sufficient data to say, yes, debit cards can generate credit scores, or, not, it’s impossible.”
Using prepaid data to determine a consumer’s creditworthiness is not a new concept. In 2009, LexisNexis and MasterCard were working together on a similar project, while Experian launched its Emerging Credit Score in 2008, which relied on purchasing history and bill payment rather than credit data to score risk. Still, Orman’s card may revitalize such efforts as program managers continue to look for ways to make their cards more attractive to consumers.
According to a New York Times report, Orman has said she will not mention the card on her CNBC show. And, just because Orman is a personal finance guru with a reputation for helping consumers in financial trouble doesn’t mean the Approved Card immediately will overcome the negative perception prepaid has received care of other celebrities, according to Ben Jackson, senior analyst at Maynard, Mass.-based consultancy Mercator Advisory Group.
“I think that given the Kardashian Kard, the criticisms of Russell Simmons’s RushCard and low adoption of other celebrity cards,” Jackson says, “Orman will need to spend time managing the image and messages around her card.”