I don’t have any data to back up this assertion, but I’m also betting that I’m not going to get a lot of disagreement with this statement: People in the blogo-/Twitter- sphere are not big fans of the Kardashian prepaid card.
Anecdotally, I’ve seen the following tweets:
@cardanalysis I myself am speechless- yet another example of how GREED is taking precedence over common sense and protection of youth
@jimmymarks I don’t know what makes me wanna puke more – the website for the Kardashian Kard or the reason it exists.
@suzeormanshow So I have heard of many ridiculous things but this takes the cake http://bit.ly/cuM6Fz
And then there’s an article from ConsumerismCommentary, which accuses the Kardashian Kard, with its $7.95 monthly fee, of possibly being the worst product of the year. (What was particularly interesting to me, was that, right next to the article on ConsumerismCommentary was an ad from another prepaid card, the Rush Card, which has an activation fee of $3 and a monthly fee of $9.95.)
Personally, I’m not sure I share the horror and disgust as others seem to do.
And furthermore, to those who do seem to abhor this announcement, I have some bad news: I think this is the tip of the iceberg, and just the beginning of a whole slew of celebrity-endorsed prepaid cards.
I can’t help but wonder: If it had been Oprah who announced a prepaid card, or some other well-respected celebrity, would the Twittersphere be so up in arms?
The reality here is multi-faceted:
First of all, consumers are increasingly finding prepaid cards to be effective tools at helping them manage their financial lives — despite the monthly fees. Sure, for those of us fortunate enough to have enough money in our accounts to avoid paying monthly fees, $8 or $10 per month sounds like an onerous fee. But according to the ABA, 14% of checking account holders pay more than $10 per month in fees (they’re what I call the Overbanked).
Second, consumers love affiniation. That’s a word I made up that combines “affiliation” and “affinity.” Affinity cards are nothing new. In the credit card space, at least. No reason why they wouldn’t be popular for prepaid cards. And consumers — well, certain types of consumers, at least — like to affiliate with their favorite celebrities, athletes, etc.
Third, the economics are compelling. This isn’t like managing a credit portfolio with its inherent risks. The economics for the celebrity and the card issuer are very attractive. There’s little risk, and the costs of issuing and administering the card are highly variable (versus high fixed cost) — which is a good thing (didn’t want this to sound like a negative connotation.
Fourth, this is a marketer’s dream. How many marketers employ celebrities to hawk their wares today? Plenty. How many of them can quantify the impact of the celebrity endorsement? Lot less than plenty. A celebrity prepaid card enables marketers to offers deals (discounts, etc.) to cardholders. It’s a way to (more) precisely target offers and (more) accurately determine the impact and return of those offers.
I can understand it if you don’t like the Kardashian Kard. But we’re going to see a lot more of these, and they’re not always going to be from the celebrities, athletes, and whatnots that you think are the most upstanding citizens and best influences on society.
Ron – points well made. My first reaction was much as those noted in your post, namely, “you’ve got to be kidding me!” (ok, there might have been another word in there). But then I realized, guess what dummy, the card isn’t designed for you and the issuer really doesn’t care because I’m not their target market.
Ron, as a fan of Capitalism, I thought this was a great idea. If the product fails due to the high monthly fee, the market will have spoken. If it succeeds and, the market will have spoken. If you decide to have a Marketing Tea Party pre-paid card with a monthly fee under $5 bucks I will get it.
By commenting on this blog am I affiniated with your site?
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This proves that price means nothing to consumers when the want to associate with a particular brand. The folks who have BofA cards branded with their favorite NASCAR driver probably don’t care much about the terms of service. BofA is neutralizing price as a factor by aligning its products with brands people really care about — e.g., NFL teams like the Dallas Cowboys and New England Patriots. If you want to write checks or use a debit card bearing your favorite team colors, you don’t care what it costs. “I want it” trumps “I can’t afford it.” That’s the power of branding in action.
I love your new word, affiniation. Let me be the first to dub America: Affiniation Nation.
MB: When I heard about this, my first thought was “hmmm… would love to see the market research that went into this decision.”
DG: Don’t think that I haven’t thought about how to issue my own prepaid card. But what about this: a TwitterCard. If we can get all our Twitter buddies to go in on it, then we can issue our own card. There would be a fee, but whatever profits we made in interchange fee could be refunded to the cardholders in proportion to their spending.
BK: No. There are lots of people who comment here are deaffiniated with me. However, if you comment here AND you respond to my tweets then we are affiniated. If you’ve ever emailed me directly, then we are deeply affiniated. Don’t worry, I won’t tell anybody.
JP: Aha. So if “I want it” trumps “I can’t afford it” then the new so-called “frugality” is just a crock of… Sorry, can’t let that one go.
MP: I like it.
1) My revulsion had a lot to do with the website for Kardashian Kard, which looks as though it was built to advertise a perfume that smelled like cell phones. Cell phones, mind you, that had been vigorously rubbed against the body of Prince.
2) Yes, the Kardashian Kard *is* just the first of many. But that’s really friggin’ depressing. I am a credit union member. My checks are free, my ATM transactions are free, lost cards are replaced for free, I can actually talk to an MSR or a manager if I have any issues, and I’ve been approved for products I couldn’t get elsewhere. I can tell as many people as I want that series of facts, but does anyone care what a (mostly) decent person has to say?
No. Because Kim Kardashian has a giant butt and a tanning bed. And her own prepaid card that preys on the idol worship of people who don’t have common sense as it relates to finance. Or maybe not enough financial education? Maybe not any? What do the Kardashian Sisters care, they’re not going to be answerable for the crappy decisions made the by the people that get their crappy card. They’re not insuring anyone’s well being or their deposits – they just had to get their picture taken and now they’re done with it. Our best, and maybe only, hope is that the stopwatch hits 15:01 and the Kardashains just go away and take their “let’s play economy” card with them.
3) On economics (personal, not business): Thinking you’re going to get rich with a Kardashian Kard in your purse (I honestly cannot see how there’s a male demographic for this stupid thing)? You’ve been had. And according to the CreditUnions.com article below, the card’s target demo is young adults (25-35) “making $60,000”. Are you kidding me? Median income for that age bracket is how much? And the higher-income end of the bell curve is going to get this card instead of going to a bank *why*? No, I’m not sold.
And 4) JP, I get the appeal of customized “affiniated” merch from a bank or CU, but people aren’t seeking out University National Bank (the backer of the KK). They want this card because the Kardashians are on it. If you’re a bank customer and get a debit card with a team logo on it for an extra ten bucks, why not. But lining the Kardashians’ pockets while they chip away at your already meager income? Come on, people.
post I mentioned :: http://www.creditunions.com/blog.aspx?id=4045
Why I Abhor The Kardashian Kard
As Ron stated, this is a marketers dream and there is no doubt the Kardashians will make a fortune on this latest venture- laughing all the way to the bank on this one. We all know the obvious- these girls are not exactly the poster children for responsible spending- so I won’t even go there.
This is a gold mine for the issuer. Ron is right, we will be seeing a lot more of celebrity endorsed cards- celebrities will continue to profit from our perceived ignorance, while issuers will seek to replace lost revenue from the latest debit and credit card regulations.
So, why do I hate this concept so much? It makes American’s look stupid. Contrary to the claims, prepaid cards do not teach young adults how to manage money any more than checking accounts and debit cards. Cash is the best lesson- you spend what you have and when it is gone, it is gone. Same with a prepaid card- so why would one pay $95 annually to “manage” what is spent- oh yes, so I can learn money management skills- I get it, stupid me. Let me spend $95 annually to learn how to manage money. That’s the lesson! Duh!
Back to basics- a credit card helps teach how to use and earn credit, while a debit card simply provides access to a checking account- and credit unions do this for free. Why do we want to move our cash to a card and pay a fee for it? Ah, yes, because we are a financially illiterate nation- and we don’t know any better. Let’s dig a bigger hole for our youth to climb out of- as though the student loan crisis is not enough.
For the record, I despise prepaid cards from a business standpoint- especially for credit unions. Never once in my career have I recommended credit unions issue prepaid cards- and I never will. It is unethical and nothing more than card issuers and credit card processors trying to capitalize on fees no longer permitted by the CARD Act- at the expense of YOUR members. But that is another story- could be time for Ondine to start a blog of her own.
Ondine – well said. Generation Y needs to build credit. Period. Like it or not, your credit score will be more important when you graduate than your GPA. You’re not going to score any points by karrying the KK. It’s lazy and stoopid. Credit unions need to help this next generation build credit -and a credit card has always been the best way.
BUT – and there’s always a but, isn’t there? (and according to Jimmy Marks KK has a big one) but I digress. I do believe that credit unions seriously missed the boat with their debit cards. Remember when the check printer vendor would come by with the giant book of new share draft styles? And when members would lament over whether to get the Puppy checks or the Blondie checks? We are an affinination as Shevlin pointed out. This is nothing new. It’s not a Gen Y thing.
So when we offered debit and credit cards we made them as generic and ugly as possible. Some credit unions still have the debit card with the PICTURE OF A CHECK AND A PEN on it. Oh, you know who you are…. It’s embarrassing. It shouldn’t matter, but it does.
Ondine: Honestly, I can’t understand your take on prepaid cards. On one level, people are paying for convenience: The convenience of not carrying around wads of cash. Checks are no different. Checks don’t enforce money management skills or discipline. After all, look at how many people knowingly and willingly write checks that they know will bounce. In some respects, a prepaid card is better because it doesn’t allow consumers to do that.
The other thing people are paying for with prepaid cards, in the kase of the Kardashians (I’ll stop doing that, I promise), is affinity. Around where I live, there are a lot of people who spend a lot of money on shirts that bear the logo of the Patriots, Red Sox, Bruins, etc. There are cheaper shirts on the market. But no, they want to affiliate themselves with their favorite sports team. That’s what Kardashian fans are (or will be) doing with Kardashian prepaid cards.
On a business level, credit unions will be missing a huge opportunity if they stay out of prepaid cards. If they stay out of the market for moral reasons, then SHAME ON THEM for not figuring out how to issue and use the cards in a way that is consistent with their mission and principles. In and of itself, a prepaid card isn’t evil or immoral. Like with practically any financial product, there are ways to misuse the card, no doubt about it. But a credit union shouldn’t dismiss the opportunity because of that potential.
Hey, Ron- Before I start, please know this is all in the spirit of a healthy debate and I’m happy to do so- love, love, love talking card programs! 😉
But, exactly what opportunity is a credit union missing by NOT offering these prepaid cards? There is a reason that VISA abandoned their prepaid card program about 10 years ago- VISA BUXX- aimed towards teens. It was not working.
I do think prepaid cards have a place- as gift cards in the retail sector- but not to be touted as a tool to supposedly teach basic finance skills.
As far as “paying” for convenience with a prepaid card- why on earth would I do that when a debit card tied to a checking account virtually accomplishes the same thing- for free- convenience and no need to carry cash.
I agree that credit unions can do a better job of creating “affiniation” with their debit programs and this can be accomplished via instant issue and customized card options. Some of the more forward thinking credit unions are having tremendous success with custom cards allowing the member to place ANY photo they choose.
So the reality is if my teenager wants a Kardashian Kard, I could literally do it through my credit union for free- not $100 per year. Have a custom debit card created with the THREE girls on the card and tie it to a checking account- voila! This is what credit unions COULD do if they were to be creative and yes, invest in the technology to do custom cards.
This debate reminds me of reward programs for debit/checking accounts- just because everyone else is doing it, does not make it right for credit unions. Just ask the credit unions that jumped on THAT bandwagon- not a pretty site.
The Ron Shevlin Pre-Paid card will be available soon. And I am sure it will offer a slew of online benefits and conveniences. Sign me up now.
I tend to agree with Ron. I expect more pre-paid cards from celebs, brands and FIs (including credit unions). BTW Data Monitor says “The biggest user of prepaid cards in the US is the illegal immigrant, because they can’t open a bank account.” The unbanked, under-served or whatever you want to call this segment, must have a need that is not being addressed through traditional FIs. Perhaps that is why companies like Green Dot are proliferating.