Watch out, teeny boppers – and the parents paying their bills. Justin Bieber has become the latest celebrity to enter the prepaid debit card market, inking a deal with BillMyParents on a new SpendSmart card aimed at teenagers.
Bieber is just one of many celebrities to take up the spotlight on plastic. Others include Magic Johnson, the Kardashians, Suze Orman and even cartoon characters. Issuers such as American Express and Chase have become players in the past year.
The prepaid market is growing: Consumers loaded approximately $57 billion onto prepaid cards in 2011, and loads are projected to reach approximately $82 billion in 2012, $117 billion in 2013, and $167 billion in 2014, according to the Mercator Advisory Group.
But the cards come with shortcomings, such as hidden fees and the fact that they don’t let cardholders build credit.
The Bieber-endorsed prepaid card has a monthly fee of $3.95 as well as some other charges:
- Loading charges of $2.95 from a debit or credit card; $0.75 from a checking or savings account
- Replacement fee of $7.95
- ATM charges of $0.50 per balance inquiry and $1.50 per withdrawal
- If the card is inactive for 90 days, there is a $3 inactivity charge
Currently, there are no government regulations and consumer protections on prepaid cards. Debit and credit card rules and regulations do not apply. (The Consumer Financial Protection Bureau is currently investigating the fees and practices of prepaid cards.)
In the meantime, Bieber will tout his card with a social media push. According to a press release, he’ll tap into some 30 million Twitter followers and 48 million Facebook fans to help promote the SpendSmart prepaid debit card. He’ll also produce a number of videos underscoring the need for responsible spending by teenagers. What’s more, he’ll offer cardholders some opportunities to win “unique experiences.”
No specifics yet on what those experiences entail, but it’s not all fun and games with the latest trend aimed at Bieber’s super fan community. If not used wisely, this one could cost you.