Network News

X My Profile
View More Activity
Posted at 11:00 AM ET, 11/22/2010

Beware celebutantes bearing prepaid debit cards

By Ezra Klein

4599334950_5871287d77.jpgThe financial crisis gave credit cards a bad name, and the ensuing regulations made it harder for banks to profit using the hidden fees and opaque pricing that once powered their profits. But in crisis, there's opportunity:

Enter the Kardashian Kard, which not only appeals to young consumers but also has more fees than the Kardashians have reality shows. First there are the upfront costs. For a six-month card customers pay $59.95, or $99.95 for a 12-month card. (The median fee for similar, non-Kardashian-festooned products is $10.) After those six or 12 months, there is the $7.95 monthly fee to keep using it. Users pay a $1.50 fee to withdraw cash at an ATM and a $1 fee to check their balance. They pay $1.50 to speak with a customer service representative. If they lose their card, they have to pay $9.95 to replace it. If they want to cancel their card, they have to pay $6.

So let's pretend that our teenage Kardashian fan somehow harasses her dad into getting her a six-month Kardashian Kard for her $200-a-month allowance. That would be $1,200 for the life of the card. But she checks her balance on average once a month, withdraws cash at an ATM a couple of times, and calls customer service when the card cracks, requiring replacement. At the end of six months, for $1,200 in spending, she would have paid $80.40 in fees—about 6.7 percent of her "balance." If the teenager had a checking account with a debit card, the fees would probably be somewhere between zero and $36.

Photo credit: Chicago Fabulous Blog.

By Ezra Klein  | November 22, 2010; 11:00 AM ET
 
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati   Google Buzz   Previous: Weekend column
Next: The fuzzy difference between spending and taxes

Comments

"So let's pretend that our teenage Kardashian fan somehow harasses her dad into getting her a six-month Kardashian Kard for her $200-a-month allowance"
-------------------------------------------
Okay, let's pretend that the parent is brain-dead and gives their teen a credit card. One can expect that there are already all kinds of problems with what the parents are doing in other areas of life.

Caveat emptor

Posted by: illogicbuster | November 22, 2010 11:08 AM | Report abuse

Anyone who gets a celebrity endorsed cash card deserves what they get. In my humble opinion.

Posted by: Kevin_Willis | November 22, 2010 11:15 AM | Report abuse

Stay strong, parent. Stay strong.

Posted by: klautsack | November 22, 2010 11:17 AM | Report abuse

Anyone foolish enough to use the Kardashian Kard deserves to be taken to the cleaners. Yikes.

Posted by: justin84 | November 22, 2010 11:21 AM | Report abuse

OK, what we really need is Alan Greenspan to step up to the plate and tell American consumers that this kind of (cough, cough) creativity in financial markets is what makes our economy strong and should not be discouraged. In fact, he recommends (cough, cough), that customers who may not qualify for traditional types of credit cards can greatly benefit themselves, and therefore the overall economy, if they do the American thing and participate whole-heartedly in this new innovation (cough, cough.).

Posted by: klautsack | November 22, 2010 11:30 AM | Report abuse

"OK, what we really need is Alan Greenspan to step up to the plate and tell American consumers that this kind of (cough, cough) creativity in financial markets is what makes our economy strong and should not be discouraged. In fact, he recommends (cough, cough), that customers who may not qualify for traditional types of credit cards can greatly benefit themselves, and therefore the overall economy, if they do the American thing and participate whole-heartedly in this new innovation (cough, cough.)."


It's a transfer of limited wealth from 1 private sector of the economy to another.


You know, the nanny state doesn't have to be universal.

There must clearly be some value in having Kimmy's huge butt in your wallet.

Posted by: krazen1211 | November 22, 2010 11:35 AM | Report abuse

Yeah, yeah, caveat emptor and all that. Still, that's a pretty shocking rip off.

Posted by: MosBen | November 22, 2010 11:58 AM | Report abuse

The people who get these cards are pretty much the same ones who could get hundreds of thousands of dollars in no doc no down payment mortgages a mere 2 years ago.

I just hope that the Fed doesn't include these debts in QE3.

Posted by: bgmma50 | November 22, 2010 10:46 PM | Report abuse

Post a Comment

We encourage users to analyze, comment on and even challenge washingtonpost.com's articles, blogs, reviews and multimedia features.

User reviews and comments that include profanity or personal attacks or other inappropriate comments or material will be removed from the site. Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. Finally, we will take steps to block users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site. Please review the full rules governing commentaries and discussions.




characters remaining

 
 
RSS Feed
Subscribe to The Post

© 2010 The Washington Post Company