Orman's prepaid debit card tackles a sticky problem with fresh thinking

Mark Twain was one of the keenest minds ever to put pen to paper. He was also an utter bust at managing his money. Twain poured a fortune into technological innovations that didn't work. His publishing house went broke printing books the public didn't buy.

In the end, a buddy -- oil baron Henry Huttleston Rogers -- saved Twain's bacon. Rogers made the creator of Huck Finn and Hellfire Hotchkiss declare bankruptcy. Until Twain paid off his creditors, Rogers took total control of the author's finances.

Wallet wisdom is not the strong suit of some, no matter how sharp in other ways. How about young people of all mind-sets? They're prodded to shop until they drop. Keeping wallets shut is not a skill set we encourage.

A huge segment of the population has become walled off from traditional banking. According to a MarketWatch column written by Chuck Jaffe, "Banking industry statistics show that about 25 percent of American households are 'unbanked' or 'under-banked.'"

Let's face facts: Many folks need a helping hand -- not a handout -- to stay fiscally responsible.

Enter the prepaid debit card. These cards give people with patchy credit ratings a way to complete purchases without carrying cash. The card is also a plastic pathway to pay hotel bills and airfares without worrying about cash. The prepaid debit card isn't the last and best solution ... and it has its critics. However, it can be a rational way station toward a financial footing.

Financial commentator Suze Orman is a beacon of creativity. That's why Oprah Winfrey latched on to her as a columnist for O magazine. Orman's string of nine New York Times best-sellers has wowed the publishing industry. Her CNBC show is a long-running Saturday evening staple. She has won more Gracie Awards for women in media than anybody. She has also raised more bucks for public broadcasting than any other fundraiser.

Orman scaled her way up with unstoppable determination. At 30, she was still earning $400 a month as a waitress. Then came an entry-level job at Merrill Lynch ... a vice presidency at Prudential Bache ... and now marquee billing as one of today's leading personal finance experts.

Orman has come up with her own take on the prepaid debit card. It's called the Approved Card. Her design goals were to:

•Keep fees low and transparent.

•Help card owners track their spending.

•Protect their identity.

•Keep users secure.

Another objective was to pave the way for debit card spending to be included in personal credit reports. Up until now, people who have used their debit cards responsibly have been unable to build a track record. This can prove a non-starter for someone who later wants a car loan or home mortgage. The Approved Card is the first debit card to share information with a major credit bureau.

The Approved Card is also a commercial product with its own business purposes and critics. One of them is columnist Chuck Jaffe. He acknowledges "prepaid cards can help consumers who don't have the discipline to stop from overdrawing their bank account."

As a downside to the Approved Card, Jaffe mentions the number of possible fees people could end up paying. However, he points to a plus: "It's a prepaid debit card that in many ways is superior to much of the competition." Jaffe also builds a case that the card's features aren't that special in several respects. His verdict: The Approved Card could be a very good choice for a light card user.

Our everyday financial system has been through a meat slicer in recent years. Not recommending personal financial tactics remains a policy of mine. I intend to stick to it. However, when someone like Suze Orman tackles a sticky problem with fresh thinking, who can afford to ignore it?

Mackay's Moral: As Mark Twain said, "Denial ain't just a river in Egypt." When it comes to money, who can beat dollars and sense?

Harvey Mackay is a Minneapolis businessman. Contact him at 612-378-6202 or e-mail harvey@mackay.com. Distributed by United Feature Syndicate.

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