September 24, 2013
The amount of money loaded onto prepaid cards more than doubled, rising to over $113 Bn from $57 Bn in 2009, according to Mercator Advisory Group. With increasing competition, the star power of celebrities such as Suze Orman and Justin Bieber has become key for companies to get their prepaid cards in the media.
Prepaid cards allow cardholders to deposit money into an account and to draw on those funds for purchases or cash withdrawals. They’re mainly used by consumers who would rather avoid going into debt with a credit card. Prepaid cards are also used by teens (or given by their parents) as a way to learn how to manage money. Today’s prepaid [card] features match and even surpass the features of many checking accounts, said Beth Robertson, CCM, Director of Payments Research at Javelin.
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A number of celebrity prepaid cards have taken the limelight in recent years. Some of which are highlighted below :
i. In 2010, the Kardashian sisters (Kourtney, Chloe and Kim) partnered with Mastercard to launch a prepaid card aimed at youngsters. Within weeks of its release, the ‘Kardashian Kard’ had been cancelled due to the high costs associated – a $99.95 annual fee and $9.95 initial transaction fee. Only 250 people had purchased the card at the time of its termination and they had their fees refunded.
ii. MYSPLASH, offers a Twilight saga: Eclipse prepaid card with the pictures of movie stars Robert Pattison, Kirsten Stewart and Taylor Lautner. The release of the cards coincided with the release of the film. These cards have a monthly membership fee of $1.95 or $3.95 depending on how much you load into a card, ATM fees and fees for reloading online or at a retail outlet. MYSPLASH does not charge activation or purchase fees. The company also offers prepaid cards with Flo Rida, DJ Lethal and Trey Canard.
iii. In June 2013, Card.com partnered with Robert Kirkman to issue Walking Dead prepaid cards which saw a lot of success. Card.com also offers cards with pictures on them from celebrities like Brett Favre, James Dean, Vince Neil, Chuck Daly, Norman Rockwell, Monica Warhol and National Geographic host Dr. Pol.
iv. The fees for Hip-Hop Celebrity, Russel Simmons’ RushCard are double the average prepaid card fee, according to a survey by BestPaidCreditCards.com. It costs $9.95 per month, which is 104% more than the average $4.88
v. The approved card by Suze Orman issued by The Bankcorp Bank includes a $3 purchase fee to get the card, a $3 monthly account maintenance fee, up to $2 for each ATM withdrawal and as much as $2 to speak with a customer service agent. The monthly fee is lower than the average $4.56 monthly fee charged by prepaid cards, according to CardHub.com. Cardholders can avoid ATM fees by making a deposit of at least $20 per month to their prepaid card and withdrawing strictly from ATMs in the Allpoint network, which has over 35,000 locations says Orman.
vi. Justin Bieber partnered with SpendSmart to launch his own prepaid card in April, 2013. It charges a monthly fee of $3.95. Loading cash from debit or credit charges $0.75 extra. To check balance users end up paying 2 quarters. ATM withdrawals at home cost $1.50 and International $2.50. $3 is charged if the card is not used within a 30 day period after the initial two months of card activation.
vii. The Mango prepaid card, begins with a monthly fee of $5. No activation fee is charged. The loading fee is $4.95 with balance inquiry at 50 cents. Account closure costs $10. Prepaid cards usually offer a low profit margin unless enormous scale is achieved, according to Ben Woolsey, spokesperson for CreditCards.com. Celebrities like George Lopez help increasing their chances of lasting, he says.
Many celebrity prepaid cards offered by Carmen Electra, Usher, Hillary Duff, Alan Jackson, Reba McEntire and Hulk Hogan among others, have come and gone.
An examination of the fees associated with Suze Orman, Justin Bieber and Russel Simmons’ celebrity prepaid cards by BestPrepaidDebitCards.com reveals that it can be a pricey proposition to use star powered plastic, although not always more expensive than average prepaid debit card fees. While Bieber and Orman cards charge $3.95 and $3, respectively, in standard fees, the monthly cost for Simmons’s celebrity card is $9.95 - $5 more than average fee.
LTP View: The additional fees associated with the cards may most likely be due to the celebrity branding associated with the card(s). There may be a market for such cards but higher fees may not work out for an average user who likes to keep a check on the transaction fees.