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Justin Bieber will promote a prepaid debit card via social media and develop a series of videos that will promote responsible spending.
If Justin Bieber endorses a product, will teens buy it or convince their parents to get it for them? BillMyParents, a financial services company focused on teens, is banking on it. They’ve signed a deal with the pop star to endorse a new prepaid debit card to his legions of loyal fans.
With 50 million Facebook fans and more than 32 million followers on Twitter, Bieber has enormous marketing power. As a “brand ambassador” for the SpendSmart card, the 18-year old performer will promote the card via social media and develop a series of videos that will promote responsible spending.
“By combining our new teen prepaid debit card with Justin's vast reach and financial educational materials, we can empower countless families with teens to think about responsible spending in a new and better way,” said Mike McCoy, chairman and CEO of BillMyParents in a news release.
Beiber will become the face of a new version of the SpendSmart card. BillMyParents has not announced a launch date for when that marketing campaign will begin, but its public relations firm said it should happen in a couple of weeks. At that time, the SpendSmart card will get a new design, but the product features and pricing will stay the same.
SpendSmart is a prepaid debit card that can be used anywhere MasterCard is accepted. Like most prepaid cards, it has a long list of fees:
- Monthly fee: $3.95
- Loading charge $0.75 to add money from a checking or savings account; $2.95 from a credit or debit card
- ATM charge: $1.50 per withdrawal; $0.50 per balance inquiry
- Inactivity fee: $3 if the card is not used for 90 days
- Replacement fee: $7.95 if the card is lost
Is this card right for your teen?
“The good thing about a prepaid debit card is that you cannot go into debt,” noted Gerri Detweiler, personal finance expert at credit.com. “You can only spend what’s on the card, so for that reason it’s a great way to manage an allowance.”
And this Bieb-endorsed prepaid card gives parents maximum control. They can sign up for text alerts every time the card is used or download a smart phone app that makes it easy to track the balance and see individual purchases. Parents can also temporarily freeze the card if they don’t like how the money is being spent and permanently block it from being used at some retailers.
But there are other factors to consider.
Bill Hardekopf, CEO of lowcards.com, doesn’t like most prepaid cards in general and questions the educational value of this card.
“I’m not sure a prepaid debit card really teaches financial responsibility,” Hardekopf said. “I don’t know if this is the right way to go for a young person.”
John Ulzheimer, president of consumer education at SmartCredit.com, points to that monthly fee, which adds up to $47 a year. He doesn’t like the idea of teaching teens it’s smart to pay a fee to use your own money.
“That’s a very dangerous message to send a young person who is basically at the beginning of their consumer credit lifecycle,” he said.
Ulzheimer said it makes sense to pay an annual fee of $50 to have a credit card with a $25,000 limit because it gives you access to someone else’s money. But he said it is “unreasonable” to pay almost that much for a debit card where no credit is extended.
Heartthrob singer Justin Bieber sings the song that catapulted him to stardom in 2010, "Baby," for fans on Rockefeller Plaza.
Financial experts point out that prepaid debit cards do nothing to create a credit history or build a credit score because these transactions are not reported to the credit reporting agencies. To do that, you’d need to get your child a low-limit credit card, something you can control as the co-signer.
“I like the idea of giving a young person a credit card with limits on it,” Ulzheimer said. “It’s almost like a credit card with training wheels. And teach them the proper way to use it, so when they’re out on their own they understand there’s a right way and a wrong way to manage credit.”
The hot new plastic
Demand for prepaid debit cards is skyrocketing. According to the Mercator Advisory Group, $57 billion was loaded onto these cards in 2011. That’s expected to top $168 billion by 2015.
These cards are popular with people who don’t have or don’t want a bank account or who can’t get or don’t want to use a credit card. They’re endorsed by big name celebrities, such as Suze Orman, Magic Johnson, LilWayne, Russell Simmons, Alex Rodriguez, and George Lopez. And who can forget the Kardashian Kard, launched in 2010, with fees so high it was quickly pulled off the market?
Right now, there are no government regulations on prepaid card fees, so the companies that issue them can charge whatever they want.
The bottom line
The SpendSmart card is less expensive than some prepaid debit cards on the market. And it does have some nice parental control features. But there are money-saving alternatives.
The new Bluebirdcard from American Express and sold by Wal-Mart, can be used fee-free if you stick to in-network cash machines.
The Chase Liquid prepaid Visa debit card is another good choice. It has a flat monthly fee of $4.95.
The Kaiku Visaprepaid card is free – there’s no cost to get it. The monthly fee is only $1.95 and you can use any of the 50,000 ATMs in the Allpoint network for free.
And there’s always a conventional debit card that’s linked to a checking account. It can be used fee-free, aside from any bank charges for the checking account.
“Maybe the lesson to teach your kids is that just because it has a celebrity name on it, doesn’t necessarily mean it’s the best product for you,” said financial expert Gerri Detweiler.
More information:
- Consumer Reports: Prepaid Cards: Plastic That’s Less Than Fantastic
- Bankrate: Pros & Cons of Prepaid Debit Cards
- SmartCredit: Why Isn’t My Prepaid Debit Card on My Credit Report?
- ConsumerMan: The Truth Behind Suze Orman’s New Debit Card
- ConsumerMan: Prepaid Cards Might Not Be So Bad for Those Who Overdraft
Herb Weisbaum is The ConsumerMan. Follow him on Facebook and Twitter or visit The ConsumerMan website.
Pop star Justin Bieber, who has sold over 15 million albums worldwide, sings his hit that's number one on iTunes, "Boyfriend." The song's video has been viewed on YouTube over 44 million times.
Leave a Comment:
How 'bout a "Just_Bill_Bieber" Card!!
He can afford it.....
Bill Justin Bieber!
Let's see if the Big Man will Foot the Bill???
that freak should screw that microphone to his head so it won't fall off. right ! it would be better to be a bill Justin beaver debit card. that punk is suppose to be an adult he is 18.
Yes, companies often use pretty young girls to promote thier products.
So why is this news?
Pay off another celebrity to get young kids hooked into debt for life. Another pitiful display of baiting kids in thru their parents like heroin to a life of being poor. Would you expect anything else today?
So here we have an 18 yr old little S***, and a money-greedy company, who will be promoting a debit card that's going to charge all of these fees to teenagers. Wow, what a great lesson in financial responsibility (sarcasm here). Not to mention that debit cards do absolutely nothing to help young kids start good credit histories. This is a total bunch of B.S.
Nowhere in the article are the words job, work, or employment. So apparently young people don'e earn the money, it is given to them. Not quite sure how this will "empower countless families with teens" to think about responsible fiscal management. My teen is a great kid. However, she has a better chance of going steady with Bieber than having this card.
Bieber. About as brainless as the stereotypical blond bimbo. And so is anyone who pays for a debit card.
WOW!!! It seems to be outrageously overpriced and you get charged for inactivity as well. And to think this rich overrated pop star would endorse something like this is absurd.
You know, sometimes it's just too easy, even for me. Every late night talk show host in the country will take a shot at this low hanging fruit (Talk about a gift).
I can see it now, a big digital billboard sized picture of the little twink with the caption:
BILLMYPARENTS
"because I'm NOT responsible"
Ooohhh Bieby Bieby....
There's a reason why some species eat their young.
Seriously? 3.95/mo, .75 or 23.95 to add $, ATM Fee, Inactive Fee, etc.
Just open a Savings Account and get a Debit Card, deposit only the Monthly Allowance into the Saving Account in the Teens name and avoid all those Fees associated with a Pre-paid! The Teen can only spend what's deposited.
sorry for the typo, the fee to add $ with Credit or Debit is 2.95 NOT 23.95
Prepaid debit cards are what identity thieves use as an aid to file fraudulent federal tax returns. They send the false return proceeds to their debit card account(s) and clean them out months before anyone has a clue. The companies and banks that do not use proper ID verification are only helping criminals steal from all of us and most likely they could care less as long as they make money.
“By combining our new teen prepaid debit card with Justin's vast reach and financial educational materials, we can empower countless families with teens to think about responsible spending in a new and better way,” said Mike McCoy, chairman and CEO of BillMyParents..."
HAHAHAHAHAHAHAHAHAHAHA...boy, that's a good one, Mike!
I'm sticking with Dave Ramsey's suggestion of teaching kids the value of money (spending, saving, and giving) from a young age!
The advice for teens to have a low-limit credit card is the stupidest thing I have ever heard. I started with low-limit credit card, and I was very disciplined with it, but slowly that limit got raised and I got a little more frivolous, and eventually I had 9000 in credit card debt. Thankfully, that debt has been paid as well as my car loan and I am onto debt snowballing my student loans!
Typical of a financial corporaton... offer a service to people who can't really pay for it or understand the consequences of its use.
Aaaannnnnddd... mommy and daddy get to pay the consequences.
Want to teach kids financial responsibility?... let them get a job and pay cash for everything.
This should be illegal... its litttle more than loan sharking.
Let me see if I read that correctly.."loading fee from a debit card $2.95". So it will cost me $2.95 to load my own money to my own prepaid debit card? If you have a debit card why would you need to get a prepaid debit card in the first place. I love how people try to screw you over because they think your stupid..........
One more way to encourage that sense of "entitlement" of kids. Better off giving them chores to do rather than sending them off to the mall with a prepaid debit card. Teach them how to work first. Then you can start on the financial end of it.
Has Bieber decided when he's going to release his line of lingerie? He already has nail polish and lipstick. I hear he 'punched' his bodyguard and is now being sued over that and not paying the bodyguard overtime. Maybe he really doesn't need a bodyguard anyway.
Prediction: Too much blowback and this does not last long if at all.
let the talentless canadian stay in his country....what a stupid idea.....kids will get one and charge alot of things then the parents will be stuck....IDIOT
I think this is a silly idea, however, it is not a Credit card. It is a pre-paid Debit card.
Great idea Bieber, lets teach kids how to not be responsible for the debts they rack up. Isn't that exactly what started the financial meltdown?
OK, maybe I'm missing something here, but isn't EVERY debit card a "prepaid credit card"? I mean, if your checking account is set up to not allow overdrafts, so that a charge you don't have the funds to pay for is denied, isn't that the same thing? Why wouldn't you just open a checking account for your kid?
This is a brilliant business model to get our kids into debt quicker. When they see the 'ease' of using the card and swiping their way to happiness with no immediate ramifications, it will make them credit card happy that much earlier in life. There's no fiscal responsibility with this card regardless if mom and dad can just shut it off. It's a training card to future debt. If you want to teach your kids fiscal responsbility have them get a part time job and match their salary as long as their grades are decent. This gives them an incentive to work and do well in school - with a financial bonus. If they don't hold up their end of the bargain and that financial bonus is cut off they'll get a quick lesson what its like to operate in the real world.
If I were a parent, I wouldn't get that for my kid, and I'm only a handful of years removed from my teens.
My dad had the right idea I think, outside of forcing me to get a job: we opened an account for me at his credit union. No fees. Interest earned on checking and savings accounts, my dad could transfer me money, and even though I was responsible and never overdrafted, we had overdraft protection set up so that it would come out of my dad's account if I really needed to use the card when it was empty.
When I have kids, that's what I plan to do.
That bundle of fees up there is ridiculous. Credit unions are the way to go.