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Justin Bieber’s Prepaid Debit Card: Just Say No

Dec. 6, 2012
Credit Cards
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Last week, Justin Bieber announced that he’d entered a “strategic partnership” with payments company BillMyParents to promote their SpendSmart prepaid debit card. Apparently having 30 million Twitter followers doesn’t impart the ability to tell good value from bad.

“Our mission is to help families teach responsible spending habits,” said BillMyParents CEO Mike McCoy in a press release. “By combining our new teen prepaid debit card with Justin’s vast reach and financial educational materials, we can empower countless families with teens to think about responsible spending in a new and better way.”

Based on its fee structure, the SpendSmart is affordable if and only if you jump through hoops to make it so. Always get cash back, don’t lose or stop using your card, load infrequently and then only by checking or savings account…it doesn’t quite seem to teach responsible spending, unless “teaching” means “classically conditioning to avoid ATMs at all costs.”

Bieber, you’re better than this.

Why SpendSmart simply isn’t

The SpendSmart comes with a $3.95 monthly fee – quite reasonable actually, lower than the surprisingly cost-effective Chase Liquid’s $4.95. But unlike the Liquid, the SpendSmart comes with a host of other fees:

  • $0.75 to load from a checking/savings account
  • $2.95 to load from a credit or debit card
  • $1.50 per ATM withdrawal (plus owner ATM surcharges, averaging $2.40)
  • $0.50 per ATM balance inquiry (plus ATM surcharges)
  • $3 for 90 days of inactivity
  • $0.50 ATM decline fee
  • $7.95 replacement card fee

How can you avoid these fees? The BillMyParents website provides great insight:

“Keep your account current and never worry about the $3 inactivity fee. Know where your card is at all times and evade the $7.95 replacement fee.”

Another suggestion? Get a different prepaid debit card.

Cost comparison: SpendSmart, Chase Liquid and Amex Bluebird

  SpendSmart Liquid Bluebird
Monthly fee $3.95 $4.95 $0
ATM withdrawal* $1.50 + ATM surcharge $0 $2**
ATM balance inquiry $0.50 + ATM surcharge $0 $0
Cash/checking or savings/credit or debit card load $4.95/$0.75/$2.95 $0/$0/$0 $0/$0/$0
Replacement card $7.95 $0 $0

*It is worth noting that you can get cash back with the SpendSmart and Chase Liquid, but cannot with the Bluebird.
**Waived with direct deposit, which most students don’t have

Another celebrity endorser, another not-so-great prepaid debit card

To the teens and parents who might be considering BillMyParents now that the Biebs has endorsed it: Responsible spending starts with choosing the right financial products. This isn’t one of them. True, it isn’t as bad as, say, the ill-fated Kardashian Kard or Russell Simmons’ much-maligned RushCard, but it’s still not the best option out there for teaching or for modeling solid financial behavior.

But it’s almost worse, in some respects. Russell Simmons has a financial stake in the RushCard’s performance, so he has an interest in promoting trust in the product. Bieber, on the other hand, will be a “brand ambassador… through various forms of media, including social media, to drive awareness of BillMyParents and encourage responsible teen spending.” He’s the face on the ad, the voice on the sponsored podcast, nothing more.

Should we be disappointed in him if he markets the product without using the card himself, or wary of a voice for financial responsibility that can’t do a simple cost comparison?