NEW YORK (TheStreet) -- Suze Orman, Lil Wayne, Magic Johnson and Russell Simmons all have something in common: They have their own prepaid cards. While there are plenty of prepaid cards available, some consumers, especially younger ones, are drawn to products endorsed by celebrities -- they get a piece of memorabilia and think they are getting a deal. But do celebrity prepaid cards really let you get the best bang for your buck? Let's compare the fees and associated features to the industry's leading prepaid cards.
Target market for prepaid cards
According to Javelin Research, prepaid cards are more commonly used by the "underbanked." Celebrity prepaid cards are predominantly marketed toward the younger generation, who may be drawn in by celebrity star power. A Javelin study points out that those low-income consumers, who often don't have a bank account, are almost twice as likely to use prepaid cards as the general public.
From the study:
- 56% of underbanked consumers report that they use their prepaid card for online purchases.
- Underbanked consumers report higher average prepaid reload amounts than other consumers.
Western Union (WU) is no celebrity, but you've probably heard of the money transfer giant, which issues MoneyWise and a Gold Card; both are real winners, according to prepaid-industry peers at the annual Prepaid Expo. This year, Western Union's MoneyWise Prepaid MasterCard (MA) was selected as best in its class in the best general-purpose reloadable category. The Western Union Gold Card Prepaid Master Card took the best consumer value prize. Both are highly distinguished awards.
Unlike other prepaid cards, with Western Union a user isn't charged a fee for purchases, online statements, direct deposits or customer service inquiries; nor is there a monthly fee. Western Union prepaid cards can be challenged only by another giant -- American Express (AXP), which issues its own prepaid card without monthly fees. Wal-Mart (WMT) recently partnered with American Express to offer this prepaid product under a private label, Bluebird. Having no monthly fees is a rare advantage in comparison with other prepaid cards, including the dominant Green Dot (GDOT), which charges $5.95 per month on accounts holding less than $1,000.
In the celebrity prepaid card world, the Suze Orman Approved Card right off the bat charges a $3 upfront fee and a $3 monthly charge. This is much lower than Lil Wayne's Young Money Card, which charges $6.95 at start-up and a $3.95 monthly fee, or Russell Simmons's RushCard, which offers a monthly plan at $9.95, or the recently launched Magic Johnson Magic Card, which charges a $4.95 start-up fee and a $4.95 monthly fee.
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