The Kardashians are the latest celebrities to hop on the bandwagon of promoting predatory businesses targeted at unsophisticated Americans, in exchange for big endorsement payouts. These prepaid debit card companies bury all sorts of fees in the fine print, which their typical customer does not figure out until later.
Now we’ve looked at a lot of bad prepaid debit card deals. The Kardashian Kard takes the cake when it comes to fee nonsense. It costs $6 to cancel the card, $1.50 to talk to a human call center representative, $9.95 to activate the card, and $7.95 per month to maintain the card. Not only that, the card has a never before seen “pay up front” feature, where you have to cough up either 6 or 12 months worth of payments for $59.95 or $99.95 – probably because they know you’re going to destroy the card as soon as you realize it costs way more than a checking account, and that you get dinged $1.50 per ATM use, $1 per reload (though direct deposit is free, for all those teenagers who get direct deposit…), and $1 per ATM inquiry… the list goes on.
Even the cheapest of prepaid cards, offered by GreenDot or Western Union, charge the average cardholder around $14 per month based on our analysis of their financial filings with the SEC, for everything from loading cash, to ATM withdrawals, to activating the card. The largest prepaid issuer, Green Dot, retains their average customer for less than 6 months by our calculations, and there are literally hundreds of complaints from consumers. They claim the number is closer to 9 months, but their definition of an active card is something that has been used in the last 90 days… you do the math. Perhaps that’s why the Kard is so intent on locking you in for 6 or 12 months upfront.
The Kardashians aren’t the first celebrities to peddle rip off prepaid debit cards. According to the NY Times, Johnny Cash, Usher, Carmen Electra and the football player Vince Young have all had their names attached to a prepaid cards as well. Russell Simmons has also caught flak for his role in promoting debit cards from RushCard. His BabyPhat card costs $19.95 to activate, while his Purple Diamond card costs $9.95 per month and charges you $1.00 per paper statement.
Don’t get lured in by Russell Simmons and Kim, it’s actually cheaper to just go to Bank of America and open a checking account for $8.95 per month! We recommend that you instead pick up a checking account and a secured credit card from your local bank for a <$30 annual fee. Expect to be offered an unsecured credit card after 12 to 18 months of good behavior. With continued good behavior on an unsecured card, you will start to qualify for high end cards like 0% balance transfer cards and cash back credit cards.
Another recent example of celebrities endorsing seriously questionable businesses is Mr. T’s endorsement of Cash America’s Gold Promise program. The program allows people to mail in gold, and pays them an absurdly low amount of money for what they’ve sent in, essentially robbing them of the true value of their jewelery. While Mr. T’s endorsement of Cash America’s Gold Promise program may be hilarious to watch, the business certainly preys on the public’s lack of knowledge about how to correctly value gold jewelery.
We believe that celebrities need to stop promoting these predatory businesses and focus on doing good instead. Most of America is simply too trusting to realize that they’ve been led astray.