Is the Kardashian Kard That Bad?

NEW YORK (MainStreet) – The Kardashian Kard is no more.

The prepaid debit card, which came emblazoned with the image of the inexplicably famous Kardashian sisters, was pulled off the market Monday after the sisters terminated their marketing relationship with the card’s issuer, University National Bank. The breakup came after weeks of controversy surrounding the card’s exorbitant fees, culminating in the Connecticut Attorney General’s office announcing an investigation into whether the card violated state consumer protection laws.

The card was rightly excoriated for its laundry list of fees, including a $99.50 charge for the first year and additional fees for ATM use and customer service calls. But the Kardashian Kard was by no means the only prepaid card sticking its customers with hefty fees.

Prepaid debit cards are essentially gift cards that can be ‘reloaded.’ Once loaded with cash, they can be used like debit cards, only without being linked to a checking account. They’re typically used by people who have neither a credit card (usually because of poor or insufficient credit history) nor a debit card (because they don’t have a checking account). A prepaid card gives these consumers all the convenience of plastic, including the ability to make online purchases and the freedom from wads of cash or unwieldy checkbooks. However, this convenience comes with a price: activation fees as high as $19.95, monthly fees as high as $9.95 and a litany of other hidden fees, according to NerdWallet.com, which tracks fee and reward info for credit cards.

“I still don’t understand why anyone would get a prepaid card,” says NerdWallet founder and CEO Tim Chen. “Most people who can get one can also get a checking account.”


Of course, a lot of people simply don’t want a checking account, and their numbers are expected to grow as more national banks begin charging monthly fees. But before you ditch your bank for a prepaid card with lower fees, consider two things: First, not every bank charges monthly fees (Capital One and PNC are still fee-free, for instance), and those that do will usually waive the fees if certain conditions are met. Secondly, the vast majority of prepaid cards still cost more than maintaining a checking account – even one that charges a high monthly fee.

NerdWallet tracks numerous prepaid cards on its site, and several carry annual fees in excess of $100. The card with the highest fees, the Vision PrePaid from The Bancorp Bank, costs $153 for the first year. That averages out to $12.75 a month, well above what any of the major banks charge to keep open a checking account.  Other offenders include the Pink ACE Elite from Visa, which contributes a percentage of each purchase to breast cancer research but also charges $123 for the first year.

In all, nine cards listed on the site had a higher annual fee for the first year than the Kardashian Kard. “I don’t think the Kardashian Kard was the worst of the worst, it was just the most visible,” says Adam Levin, chairman and founder of Credit.com.

That’s not to say that the Kardashian Kard got a bum rap, though. Much of the outcry stemmed not just from the monthly fees, but from the litany of additional fees buried in the card agreement’s fine print. Those fees included a $2 bill pay fee, a $1.50 fee for calling the card’s customer service line and a $6 fee for canceling the card. “What puts the Kardashian Kard head and shoulders above all the others is those other fees,” says Bill Hardekopf, CEO of LowCards.com, which tracks and compares credit cards. Combined with the fact that the Kardashians’ image was clearly used to market the cards to teens, it’s easy to see why it generated so much opposition.

The question now is whether that same outcry will be turned on the rest of the prepaid card industry.

“Will they be subjected to scrutiny? Absolutely, without question,” Levin says. In addition to the fees, he notes numerous other issues with the cards, including the fact that they aren’t insured by the Federal Deposit Insurance Corp. and typically don’t offer any kind of overdraft protection. That could change if the government takes an interest, though. “The [Credit Card Accountability, Responsibility and Disclosure] Act is a work in progress, and with Elizabeth Warren coming on board and the [Consumer Financial Protection Bureau] evolving, this is one of the areas they’ll look at,” Levin says.

In the meantime, the industry will continue to rake in cash from consumers desperate for plastic but unwilling or unable to secure a debit or credit card. And while the Kardashian Kard has faced major scrutiny, card issuers are clearly still willing to market prepaid cards to teens. Myplash.com, for instance, offers numerous “Mypla$h Teen Prepaid MasterCards,” including some branded with the stars of The Twilight Saga: Eclipse.

That’s a trend that doesn’t sit well with Hardekopf.

“Are the Kardashians really the image we want young people to emulate when it comes to managing money?” he says. “I don’t know if the financial services industry needs to be using characters and celebrities to market to young people.”

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

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