Celebrities upstaged on the prepaid card circuit

Suze Orman and Magic Johnson quietly exit the prepaid market.

by. Quentin Fottrell

What do Suze Orman, the Kardashian sisters and Magic Johnson have in common? They have all dipped their toes in the prepaid card market — and found the temperature wanting.

Personal-finance guru Orman launched the Approved Card by Bancorp Bank in 2012, but cardholders have received letters saying it’s being discontinued. She’s not the only one: Magic Johnson’s prepaid card , launched in 2012 with One West Bank in Pasadena, Calif., will end on June 30. In November 2010, reality television stars Kim, Khloe and Kourtney Kardashian canceled their University National Bank MasterCard-branded prepaid card less than a month after launching it after a wave of criticism about targeting unsophisticated young consumers and its high pricing model. Justin Bieber endorsed Spend Smart Card by MasterCard MA -0.09%   last year and George Lopez endorsed Mango Money’s prepaid card in 2012; neither are currently featured on their websites.

“Since the Kardashian debacle, there’s been a negative bias against celebrity card endorsements because of fee concerns,” says Curtis Arnold, founder of BestPrepaidDebitCards.com. It cost a lot to keep up with the Kardashians: $99.95 card purchase fee (including monthly fees for one year)n the first year, monthly fees of $7.95 after the initial purchase period, among others; only 250 people had purchased the card at the time of its termination and fees were refunded. Celebrity prepaid cards put them under an even bigger microscope, Arnold adds. (One West Bank and Bancorp Bank didn’t reply to a request for comment on the reasons for the closure of Orman’s or Johnson’s cards.)

“Consumers are beginning to get more savvy regarding prepaid fees,” says Ben Woolsey, president and general manager of credit-card advice website CreditCardForum.com. Orman’s card had a $3 monthly maintenance fee, less than most, but experts say that was still too high to provide a competitive advantage given their tiny market share. “Ten years ago you didn’t have any of the mainstream banks issuing those cards,” adds John Ulzheimer, president of Consumer Education at financial website CreditSesame.com. “Orman’s product was introduced about five years too late.”

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