A mega-seller of prepaid debit cards is betting millions of dollars that a whole lot of teens do
Remember in 2010 when the Kardashian sisters briefly hawked a prepaid debit card to tweens? The cards cost $59.95 to $99.95 to activate, $7.95 a month to use, $9.95 to replace, and a $6 to cancel. Remember how financial bloggers called it maybe "the worst card ever"? And Richard Blumenthal, now a U.S. senator, said he was "deeply disturbed" by the card, and accused the Kardashian clan of "marketing a dangerous financial fantasy"? And how eventually the sisters were shamed into terminating their contracts?
Well... Justin Bieber, it seems, does not remember any of this.
SpendSmart Payments Company, which offers prepaid debit cards for teens, is paying Bieber $3.75 million, along with a stock option and potential royalties, to promote its product.
According to the New York Times, Bieber is airing the first in a series of "Real Talk" videos on his YouTube channel this week. He'll reportedly tell viewers to "talk to your family about money," and advise that "managing your money is important" and "there's a great company that can help you do that called SpendSmart."
The case for prepaid debit cards is that they teach teenagers to spend within their means. But most consumer groups warn that these cards aren't the wisest option because of all the associated fees. And so, Bieber's SpendSmart card is starting to face the same opposition the Kardashians' did in 2010. CNN points out that Bieber's card costs a flat fee of $3.95 a month. Additional charges include withdrawing money from an ATM ($1.50) and checking your balance at an ATM (50 cents).
These fees are much lighter than the Kardashians' MasterCard's, but still, as John Ulzheimer, president of consumer education at SmartCredit.com, told Fox, "If you just take the monthly fee and nothing else — meaning that you do nothing else punitive so they can hit you with the fees, you’re still paying a little over $47 a year as an annual fee to get access to your own money."
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