The New York Times says that Suze Orman intends to shut down the Approved prepaid card. That follows a recent decision by Magic Johnson to discontinue his Magic Card.
While it is probably a fair statement to say that most celebrity cards (Kardashian, George Lopez, Lil' Wayne, et al.) rarely reflected a good choice for most people, I think that these two cards were exceptions to the rule. They had the kind of flat-fee price structure that has become the new standard. Moreover, they came with add-on features that stood out.
The Approved and Magic Cards were both solid offerings. Orman had a contract with TransUnion which had the potential to help customers build the kind of payment history that might have improved a credit score. TransUnion said that it would monitor the activity of Approved customers. Moreover, the price was right. Orman's card charged a monthly fee of three dollars. With that, a customer could conduct transactions at no cost. Save for individuals that wanted to speak to customer service several times per month, customer service was also free.
Magic's card folded under the pressure of a lawsuit. Reed Wallace, the owner of Celebrity Cards International, brought a suit against Magic which claimed that the basketball player turned billionaire had "stabbed him in the back" after they agreed to market a Magic Cash Card. Wallace also named OneWest Bank, the issuer of the Magic Card, in his suit. According to the New York Post, the suit was withdrawn after the parties agreed to a legal settlement.
But lost in that conflict is the fact that the Magic Card was also a consumer-friendly product. Its MagicMojo was an innovative vehicle for savings. It was essentially a platform for PiggyMojo. PiggyMojo used text message and automatic transfers to create a structural incentive for savings. When a person made a "save," the programming in MagicMojo was set up to allow that action to be communicated to a recipient of the card. Savings inspired by the ideas in behavioral economics is the latest rage. Well, the Magic Card was poised to deliver that to hundreds of thousands of consumers.
Then there is the issue of competition. The number of people who believe that they can manage a prepaid card is dwindling. That's for a good reason. With price compression and low margins, the only way to pay off the fixed costs of entry is to achieve scale. Green Dot, BlueBird, Emerald, NetSpend...I think these cards are going to be among a small set of about eight to twelve "winners" I am not sure how many cardholders it will take to survive, but the number is certainly a lot higher than 50,000. With their celebrity appeal, the Magic Card and the Approved Card stood a good chance of meeting the hurdle. I believe that the fact that they are going away is a loss, as both were offering some consumer-friendly services that were fairly unique.
Although the Magic Card is going to remain viable until the end of June, its web site is no longer being maintained.