As prepaid cards enjoy increasing popularity, a number of celebrities, including the Kardashian sisters, finance guru Suze Orman, teen pop singer Justin Bieber and hip-hop mogul Russell Simmons, have emerged to endorse the rapidly growing form of payment.
BillMyParents, a financial firm whose products are aimed at teens, signed a deal with Bieber, who will serve as the “brand ambassador” for the company’s SpendSmart card. Bieber will promote the card through social media channels, as well as develop a number of videos aimed at promoting responsible financial behavior, AOL Daily Finance reports.
Orman has also tried to promote a prepaid card, the Approved Card, as a credit card alternative that carries low fees. Approved Card cardholders will have access to free credit reports for one full year and identity theft protection.
Simmons has focused heavily on public relations to promote his Rush Cards, which cost between $4 and $15 to acquire, and carry a monthly fee of $10 and $1 PIN-based transaction fee, though a pay-as-you-go plan is also available, according to AOL Daily Finance.
The celebrity trend of endorsing prepaid cards goes back to 2003 when Hilary Duff was pictured on a prepaid Visa card aimed at teens and has become widely familiar after the Kardashian sisters promoted a prepaid card that carried exorbitant fees, leading to a negative public relations fiasco and the decision to pull the promotion.
Choosing a celebrity-endorsed prepaid card, however, may not be as wise as choosing a secured card. Celebrity-endorsed cards carry acquisition fees and monthly fees, though the consumer’s usage behavior is not reported to credit bureaus, AOL Daily Finance reports.
Some financial industry participants have voiced concern about the marketing of prepaid cards to teens.
“I’m not sure a prepaid debit card really teaches financial responsibility,” LowCards.com CEO Bill Hardekopf said, according to LifeInc. “I don’t know if this is the right way to go for a young person.”
A secured card, depending on the issuer, allows for up to $10,000 in deposits, which in turn becomes your credit limit. Issuers then report your card usage to the three major credit agencies, thereby allowing the consumer to build a credit history with the card.