The Approved Card from Suze Orman, a prepaid debit card, will no longer work as of July 1, 2014. There was no announcement or press release. The information showed up in letters to account holders in June.
Nor was any reason given for the shutdown. It may have been that the business was simply losing money. Despite a fee structure that was once very competitive, the card probably did not gain wide enough acceptance in the market to become profitable. The Approved card cost $3 to purchase and $3 per month to maintain, and many regular transactions were free. When it launched, most competitors’ celebrity-endorsed prepaid debit cards charged higher fees both to purchase (the Kardashian card famously cost $100) and to maintain (Justin Bieber’s card came with a $3.95 monthly fee plus various fees for basic transactions, including loads).
In the time since the Approved card was launched, several big financial institutions put their own prepaid debit cards on the market.
No credit for debit
The most disappointing aspect of the closure is Orman’s apparent failure to effect any change (yet) to the credit scoring model. Her belief is that consumers who avoid debt are doing the right thing by managing their finances without credit cards; that choosing to use a debit card over a credit card is a wise financial decision. Unfortunately, the credit scoring system in the U.S. requires consumers to have and use different types of credit products in order to build a strong credit score. So consumers who believe in a cash system have lower scores which result in more expensive or lost financing opportunities (for example, a higher interest rate on a mortgage, if the consumer qualifies at all). Orman believes these consumers are being wrongfully penalized.
[Related Story: Should Prepaid Cards Be Reported On Credit Reports? ]
What you should do if you have this card
Bancorp, the financial institution that issued the cards, encourages all Approved card account holders to spend down the funds on their cards, but promises to issue a refund check to anyone with a balance on July 1st, 2014.
If you believe strongly in Orman’s philosophy that people who only spend the amount available on their debit card should be recognized by the credit scoring system, you can sign this online petition that Orman hopes to use to push lawmakers to address the issue.
More on Prepaid Debit Cards:
Prepaid Debit Cards: And You Thought Bank of America’s $5 Debit Card Fee Was Bad
5 Reasons Why a Credit Card Is Better Than Cash or Debit Cards
