Questions to a Boston bankruptcy lawyer often center around getting good credit in Massachusetts, which we discuss in the Life After Bankruptcy section of our website. However, there is always news that we can relate, products that we can evaluate, and ideas worth mentioning.
A new pre-paid “credit card” hit our radar screen recently. Television guru Suzie Orman has come out with the “Approved” card. The name is a play on a section of her popular tv show and podcast in which callers ask if they can make a purchase; Suzie listens to the idea, asks about assets, liabilities and then says “show me the money.” What follows is Suzie’s evaluation resulting in a big “your APPROVED girlfriend” or “DENIED.” It’s great tv drama for those that watch personal shows.
More importantly, however, is Ms. Orman’s excellent evaluation of financial situations that real people have and her sound advice. She has a great, practical, populist tv show with advice to real folks about real situations.
Now her product, the Approved card, has some credit conscious consumers excited: you have access to TransUnion credit reports and you have unlimited access to TransUnion credit scores. This could be wonderful for consumers’ financial education: if you use it, learn from it, and act upon what you learn. On the other hand, everyone has access to a free credit report (not score) from each of the three major credit reporting agencies once a year. What is significant, however, is that Approved card information will be shared with TransUnion. This can have a significant impact on increasing the credit scores of Massachusetts consumers who have poor scores and need to work their way out of a bankruptcy level credit score.
On the other hand: The card is for people without a bank checking account. The Approved card has a monthly fee of $3. While this doesn’t sound like a lot, it’s $36/year, and $100 after 3 years. And this is for giving her your money to hold on to. It’s a pre-paid card. But there are other fees: for example, if you use it to get cash at an Allpoint ATM network, you will be charged $2. If you go out of network, it’s $2 plus the other networks’ fee, typically $2-$3. That’s $5 to withdraw your own money! There is a $1 fee for all bills paid by paper check, however, it is free to pay bills electronically.
This is clearly not a “credit” card for most folks. Consumers should also look at the Green Dot card. However, for Massachusetts consumers coming out of bankruptcy, or just starting out with a job and unable or unwilling to open a bank account, it is, perhaps, an idea to consider. If TransUnion does, in fact, use positive information from your Approved card transactions to increase your credit score, Ms. Orman has done a great service to folks unable to establish credit. On the other hand, to increase your credit score now, you are better advised to use a secured debit card, from a bank which we wrote about on April 25, 2011 in the bostonbankruptcylawyerblog.com.