There has been some confusion surrounding the release of Suze Orman’s new prepaid debit card, the Approved Card. The confusion comes as part of the marketing blitz surrounding the card. Orman has arranged to have purchase data from the cards sent anonymously to TransUnion, and touts her credit project.
While Orman expresses a desire for debit card data to be included in credit reports in the future, so that consumers aren’t as reliant on credit cards for building a financial reputation, this is not something that is happening now. Indeed, even though, at first glance it appears that debit card data from the Approved Card might impact your credit report, the fact of the matter is that it won’t because a prepaid debit card is not a credit product.
Here is a tip sheet to help you identify the similarities and differences between a prepaid debit card and a secured credit card:
| Prepaid Debit Cards | Secured Credit Cards |
|---|---|
| Pay money up front to use the card | Pay money up front to use the card |
| Multiple fees for basic financial transactions | Multiple fees for basic financial transactions |
| Always remains a debit card, and allows you access only to the money you have on the card | Can, in time, be converted to an unsecured card that offers access to a line of credit beyond what you pay on the card |
| Does not impact your credit score | Has the power to impact your credit score |
While Suze Orman’s goal in changing the credit scoring system is noble, right now her prepaid debit card won’t help you build credit. The information sent to TransUnion won’t appear on your credit report; instead, it will be used to evaluate whether, in 18 months or 24 months, the data is worth including in a credit scoring model.
Remember the difference. If you are getting a prepaid debit card, you will not be able to use it to improve your credit score. If you are trying to build or rebuild credit, you are better off using a secured credit card.
