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Suze Orman card: Rip-off or righteous?

COMMENTARY: Suze Orman, the CNBC personal finance personality, introduced a prepaid debit card last week that's got the entire financial world buzzing. The reason? Pundits apparently can't decide whether the card is a "financial revolution" (as the overactive imaginations of Suze's press people labeled it) or "the stupid investment of the week." (Credit the "stupid investment" comment to MarketWatch's Chuck Jaffe, a long-time financial columnist and commentator.)

In reality, Suze's "Approved" card is an also-ran financial product that offers limited benefits to a small subset of the population. Most people could do better - much better - elsewhere. The only reason the card is worth talking about at all is because Suze is the queen of hype, so high-profile and vehement about her financial advice that she's inspired a series of lifelike Saturday Night Live spoofs.

At the same time, she has a loyal following of people who appear willing to take her advice, no matter where it leads. In this case, her advice would lead you to buy a piece of purple plastic that comes with a load of little "gotcha" fees and few unique benefits.

Let's take a step back and start from the beginning.

"The Approved Card from Suze Orman" (yes, that's the full title emblazoned across the top of the card's purple plastic) is a pre-paid debit card. You don't need a bank account to have one. You buy them like you buy the Russell Simmon's Rush Card or Green Dot's prepaid Visa and MasterCards.

If you have a checking account, any one of these cards is a bad deal. Your bank or credit union will provide a debit card for free, with no monthly maintenance fee. (Thank Bank of America for that, since it's "test" of a $5 monthly maintenance fee got shouted down with such force that no other bank dared tread that scorched earth.)

Suze is basing her better-than-the-competition claim on the fact that her pre-paid card's purchase fee is just $3 - that's $1.95 lower than the purchase fee for GreenDot and 95 cents better than the best-option Rush card. In addition, the Approved card's monthly maintenance fee is $3 vs. the Rush card's $9.95 monthly levy. Green Dot, however, waives all monthly fees for anyone who loads their card with at least $1,000 deposit each month - as you likely would if you were using this in lieu of a checking account.

Suze's card is better than the Rush card, but that's because the Rush card is so expensive that it serves only as proof of the ironic and sad reality that it's expensive to be poor.

When you compare Suze's Approved card to a decent option like GreenDot, it's not exactly a sweet deal.

In addition to the card purchase and monthly maintenance fee, there are 18 (count'em) additional fees that could be levied against cardholders, including a $2 fee for calling a customer service rep more than one time in a month. At GreenDot, the fee structure is much simpler. There are eight potential fees, including the purchase and monthly maintenance. That's a a full dozen fees less to worry about than with the Approved card.

Suze said in a press conference that if consumers use her card "exactly how I tell you," it will be the cheapest option. Of course, GreenDot could say the same thing and they would have far less nagging to do.

"It's far more complex than the other top-tier cards," says Odysseas Papadimitriou, chief executive of CardHub, which analyzed the pre-paid card because of Suze's pre-launch claims that it would help your credit score. Most of the 20 different potential fees can be waived if you deposit a set amount on the Approved card. But, one misstep and you get nicked.

Moreover, the claim that the Approved card might help your credit score is also untrue.

In the press conference launching the card, Orman acknowledged that the even though she will be sharing consumer's purchase data with one of the major credit bureaus -- TransUnion -- TransUnion will not be using the data to help Approved card customers build a credit file. They may someday. But they're not now and there is not even a promise to do so in the future.

If you want to build your credit, you need a secured card, says Papadimitriou. And there, too, you can find cheaper options. Cards with low annual fees; that demand less on deposit; and that charge no interest if you pay off your balance every month.

Who does this card benefit? People who don't want a secured credit card, cannot open a regular checking account because they've got such bad credit that neither bank nor credit union will accept them, and who are so poor that they cannot deposit $1,000 a month on a GreenDot card. It's only at the intersection of no credit/bad credit and poor that the Approved card is the best deal.

To put this in Suze-speak: "Girlfriend, you can do better than that."

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