Justin Bieber enters the world of prepaid debit with the SpendSmart card. The Justin Bieber SpendSmart prepaid card is something to avoid.
When you're a celebrity, you have an opportunity to use your fame to influence your fans. Endorsing certain products and services can also lead to a source of income beyond what you make as an entertainer. So it's not surprising that celebrities take advantage of their fame to make extra money on the side.
And Justin Bieber is no different with his foray into the financial services industry with the SpendSmart card.
What is the Justin Bieber SpendSmart Prepaid Debit Card?
I read about the SpendSmart Card yesterday morning on Forbes. Apparently the SpendSmart prepaid debit card comes as a joint effort with BillMyParents (a company with a name that I, like Lazy Man and Money, have serious problems with anyway). So BillMyParents is hoping to use Justin Bieber to reach millions of fans.
We all know that a great deal of marketing is aimed at children and teens, in an effort to get their parents to open their wallets, but I'm having all sorts of issues with a company called BillMyParents that “teaches” teens about money management. And just about every celebrity-endorsed prepaid debit card, from the Russell Simmons Rushcard to Suze Orman's Approved card to this latest entry from Justin Bieber, is sub-par.
Prepaid debit cards are known for their high fees, and the Justin Bieber SpendSmart is no different. Some of the fees include:
- Monthly fee of $3.95
- ATM charges: $0.50 for a balance inquiry and $1.50 for a withdrawal
- Inactivity charge of $3 if you don't use the card for 90 days
- Loading charges: $2.95 from a debit or credit card, or $0.75 from a checking or savings account
- Replacement card fee of $7.95
Lazy Man and Money estimates that if you put $1,000 on the card for your teen throughout a year, it would be fairly easy to spend $75 just to manage your own money. BillMyParents, indeed. And is that really the money lesson you want to teach your teen? Get a crappy prepaid debit card because some celeb endorses it and then pay fees to access your money?
What's Wrong with a Regular Checking Account?
Instead of using prepaid cards, consider using a checking account. My mom opened a joint checking account with me when I was 12. I learned money lessons like:
- How to write a check (this was before debit cards became the norm)
- How to use an ATM
- How to track my spending so that I didn't overdraw my account
- How to reconcile a bank statement
- How to set aside money in a related savings account
A prepaid debit card may encourage you to teach your child to track his or her spending, but most of these other basic financial lessons are being left behind. A prepaid debit card rarely offers a savings option; it's all about teaching kids to spend. And not even to spend particularly smart.
Instead of using a prepaid debit card as a “teaching” tool, consider an actual bank account. In many states, you can open a joint account with your teen, and some banks will even issue debit cards to teens as young as 14 on your joint account. Helping your teen learn to manage an actual bank account, rather than just throwing money (the BillMyParents thing is really, really bothering me) on a prepaid debit card, will go much further toward helping your child become responsible with money as a result.
Sure, there are some prepaid debit cards that don't completely suck. But few of them are developed by celebrities. And, even though the Justin Bieber prepaid debit card isn't wholly awful (it's really about on par with Suze Orman's Approved prepaid debit card), it's still not the best prepaid debit card out there.
I still think that you are better off teaching your kids to manage an actual bank account. Teach them that celebrities rarely endorse products and services that are the best value. Teach them how to track their spending and reconcile their account statements. Teach them that they shouldn't be paying $75 a year to manage their own money. And, for the love of heaven, teach them to earn their own money, rather than bill their parents.
Image source: CrazyInSane via Wikimedia Commons