Why I feel bad for Suze Orman

by JT McGee

Suze Orman, Approved Prepaid Card, Approved Card, Prepaid Debit CardI feel bad for Suze Orman, man – I really do.

The short story is that Suze Orman launched a new prepaid debit card called “The Approved Card.” Prepaid debit cards have fees – and they’re like the antithesis of everything personal finance. More importantly, Suze Orman is making rather robust claims like “the Approved Card will help you improve your credit score” when this is absolutely 100% false.

Naturally, personal finance bloggers around the world jumped on the opportunity to rail on Suze Orman for saying one thing and doing another. Essentially, Suze sold out. And she got called out on selling out.

Despite selling out, I feel bad for Suze Orman.

Suze Orman vs. Dave Ramsey

To the uninformed, the difference between Suze Orman and Dave Ramsey is often little more than a few “Girrrlfriand” labels, which Suze slaps on virtually any human with half a lick of female sexuality. It’s cute, isn’t it?

This difference was mostly true for a very long time. Suze was always kind of the moderate to Dave Ramsey’s extremism. You could say that Suze Orman was the personal finance personality for liberals, and Dave Ramsey was for neoconservatives.

I feel bad for Suze now, though, because she’s completely killed her brand. Let’s get this straight: Dave Ramsey waits until his readers and followers can invest before screwing them for their hard-earned money. It’s not until Dave Ramsey gets people out of debt and encourages good spending habits that he starts taking his dues – huge dues! He presumably generates millions through his ELP cash cow each year where people pay too much for mutual funds to make Dave Ramsey rich.

Dave Ramsey, ELP, Dave Ramsey vs Suze Orman

Suze Orman, on the other hand, obviously has a problem. Given that she has a following that now looks less human and more like dollar signs, she figured the best way to start harvesting the seed already sowed was to start a prepaid debit card with a $3 monthly fee. This is the kind of stuff that makes you want to bang your head on a composite door.

To recap: Dave Ramsey sends his followers to the chopping block – financial planners who make 5%+ on every mutual fund they sell up to hundreds of thousands of dollars. Suze Orman competes with a lowly prepaid debit card with a $3 monthly fee.

In terms of damaging people’s personal finances for a profit, Dave Ramsey has a guillotine where Suze Orman has merely a prehistoric caveman club.

The Worst Admission

Suze Orman should stand up and make one of the worst admissions of them all, “Dave Ramsey is smarter than I am.”

Ouch. Dude, that’s got to hurt.

But there’s more. It’s only logical that Dave Ramsey’s followers are more successful than Suze’s, since Suze is ripping off the poorest and most unbanked people in the United States. Dave Ramsey is actually going after the investor class, a tip of the hat to some of his students’ success.

Just compare their promises!

Dave Ramsey promises a reasonable retirement from his ELP commission scheme. Suze Orman has to stoop so low so as to offer only a better credit score – no, wait, the PROSPECT of a better credit score. (Her card doesn’t actually result in more activity on your credit report.) There isn’t much comparison between a credit score and fully funded retirement.

Dave Ramsey’s robbing banks. Suze Orman is robbing the Salvation Army bell ringers for lost pennies.

Poor Suze. She can’t even figure out how to screw people the right way.

Photo by: David Shankbone, imedla

{ 51 comments… read them below or add one }

Jessica, The Debt Princess January 16, 2012 at 01:25

“Poor Suze. She can’t even figure out how to screw people the right way.” Never has a line been more hilarious than this one!!

I say, score one for Dave. At least he waits until people have started paying off their debt. He leads them to the water and then charges them for a drink since he knows they can afford it.

Suze charges for the ride to the water, promises could be the best water in the world, charges them once they are at the water and when it’s not the best water in the world says “Well I only said it could be.”

Sorry, I think I just went off a bit too much. lol

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JT McGee January 16, 2012 at 12:26

Haha – I’m glad you enjoyed it. I am in agreement with scoring a point for Dave Ramsey on this one.

That’s a really good analogy to describe the two and their personal finance money-making schemes.

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TekGems January 16, 2012 at 01:40

You make a good point here. Go Dave Ramsey but don’t buy his mutual funds. Hopefully, people are smart enough after they go through debt repayment that they explore more cost efficient retirement options.

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JT McGee January 16, 2012 at 12:27

Tek, this is what I was trying to explain the other day on Twitter. It just comes out better in several hundred words than it does in 140 characters.

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TekGems January 16, 2012 at 12:49

I understand your criticism of Suze. For Dave, how would he have to set it up so you don’t think he’s a snake.

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JT McGee January 16, 2012 at 12:58

There are an infinite number of ways to create your own “market” for financial planning services without clouding the details, which is what the ELP service does. The ELPs pay Dave Ramsey a fee for each referral.

He could have the exact same structure with a pay-per-referral model but actually review/make available information about the costs of each retirement planner. If not on a referral basis, then he could most certainly sell advertising on an impression basis similar to Google Adwords. That would further remove his own bias that stems from him getting paid to push people to the highest bidder.

I just think it’s sketchy for Dave Ramsey to accept money from a financial planner then tell his followers that these are people they can trust. That’s hardly a way to vet candidates for quality.

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TekGems January 16, 2012 at 19:35

You are saying ELP are not vetted at all and they just pay to be included?

TekGems January 17, 2012 at 10:00

> That’s hardly a way to vet candidates for quality.

You still haven’t answered the question.

JT McGee January 17, 2012 at 09:59

They’re vetted in the sense that you can’t have any serious financial planning credentials to participate. The less understanding of finance you have, the better for Dave’s ELP deal, apparently.

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JT McGee January 17, 2012 at 13:43

They’re vetted, just not in a way that uncovers the quality from the garbage.

Why don’t you listen to Dave Ramsey on loaded mutual funds and see the very obvious difference between what he preaches and reality? Here’s a good place to start: http://www.daveramsey.com/article/why-dave-prefers-up-front-fees/lifeandmoney_investing/

They even bolded this part on the site: “The commission pays for your pro’s extensive knowledge of the thousands of mutual funds available.”

Dave Ramsey ELPs are hardly pros, as they cannot have some of the most common forms of securities licensing to participate. (Do you sort doctors by throwing out all the people who went to med school?) Furthermore, ELPs sell only four types of mutual funds, all from the same mutual fund family. All of them are loaded funds.

So, pending that these criteria are met:

* You are not an RIA (and probably other licensed financial professional)
* You agree with Dave Ramsey
* You agree to sell only four mutual funds from one fund family (with some of the highest loads in the industry.)
* You agree to pay Dave Ramsey to become an ELP
* You pass whatever additional requirements Dave has

Then you can become an ELP. How’s that for vetting?

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Romeo January 17, 2012 at 13:57

Whoa! I never even thought of Dave Ramsey in this matter. I knew there was a reason why I intuitively didn’t agree with most of his practices. I appreciate the fact that he has helped millions of people, but i hope those people are smart enough not to go to these ELPs IF what you are saying is true. Nice summary, JT. And as you may have seen, TekGems has yet to respond. Nice!

LBC Teacher January 16, 2012 at 02:00

I agree with almost 100% of this post (and def that Suze Orman is screwing people over). BUT Dave Ramsey charges $75 for this Financial Peace University class/materials. That’s a lot of money for people who are in debt and struggling just to get in the door. I think he’s smart and gives good advice, but he’s definitely making money off of poor people too.

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JT McGee January 16, 2012 at 12:27

I didn’t even begin to consider the costs of Dave Ramsey’s Financial Peace University program. Not that I’d let it bring Suze up, but maybe Dave down.

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JAVA Guy May 7, 2012 at 10:35

I know this is an old post but I just saw it and wanted to reply.

Honestly, I don’t think the $75 for the Financial Peace University class & materials is a lot, actually I found it quite cheap. I’ve been listening to Reamsey for a while after stumbling to the Total Money Makeover book. I never bothered finding how much the FPU costed because I thought that was “the catch” thinking it would cost hundreds of dollars like most conferences. When I found it was only $75 for all materials including a copy of one of his books and a lifetime membership to attend the classes, I thought that was quite cheap.

Not sure where you stand financially, but I earn well above the average person for my age, yet I lived paycheck-to-paycheck all the time. Once I did FPU and follow the simple budget advice and his “weird” envelope system, I started having pretty good money leftover every month (around 2K). I think that’s a good ROI. Now, as I said I make pretty good money but even if I did this when I was making $10/hour at a retail store I’ve have had a good percentage of my paycheck at the end of the month.

Now all his information is available from the books Total Money Makeover and the Financial Peace book (ALL), so there’s no need to pay for FPU. But, the FPU program just gives you more motivation since you’re surrounded by people with the same goals and problems. Also you have the chance to talk to whomever is leading the program and get free advice from someone that’s already been through and is debt free.

So, yes the guy’s making money, but c’mon this is America, you didn’t expect it to be free? He already gives lots a free advice in his radio show. What matters is what you buy is worth the price, and in this case I think is well worth it.

If I later decide to invest with his ELP’s after I’m totally debt-free and have 6 months of expenses in an emergency fund (part of his program) that’s a decision I will make myself. He’s not baiting you to some program that forces you to do so, therefore is up to you. I think Dave is the only person currently helping people to get totally out of debt while not taking advantage of the “struggling class”.

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Kenneth Embry January 16, 2012 at 02:25

I never could understand why it was that anybody listened to the drivel that Suze Orman was spouting…
I only seen her show a few times ,but after reading your article, I do recall that the people that she was counseling were looking for guidance and were not financially astute…

It just doesn’t make any sense that she would blow torch her brand like that though, it just doesn’t make any sens at all…

Hope that she has already been paid an upfront fee, because she is gong to need it.

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JT McGee January 16, 2012 at 12:29

Kenneth, correct me if I’m wrong, but this is how I see most people like Suze Orman – they provide enough information to have an answer but not enough to find an answer. The people who call in want the quick fix of a single, less than thought out answer so long as they can put the problem behind them for whatever amount of time. I can’t discount Orman for that, but it does seem to be part of the “game.”

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Deebs January 16, 2012 at 02:38

That’s great. Perhaps with all the controversy surrounding good ol’ Suze, her finances may start taking a dive! Do unto….

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JT McGee January 16, 2012 at 12:30

She’s loaded. Supposedly the bulk of her net worth is kept liquid in low-yielding debt securities.

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Maldivian Finance Blog January 16, 2012 at 03:04

i totally enjoyed reading this post. This is like what happened to us locals few years back from our bank. The Bank of Maldives.

A staff started using individual customers accounts to steal. The good thing is he was stealing just few pennies and over the years he earned millions. When he got caught he had enough to live for the rest of his life. Ofcourse if he is frugal the way he steal others money. bit by bit.

cheers

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JT McGee January 16, 2012 at 12:31

There’s some popular movie (I can’t remember which) that has a scheme like this. There’s even a name for it – Salami slicing. Best name for fraud ever?

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Sarah January 16, 2012 at 14:07

The movie is “Office Space.”

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JT McGee January 17, 2012 at 09:51

High five! Thank you.

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Investor Junkie January 30, 2012 at 08:16

But was first in Superman III.

101 Centavos January 16, 2012 at 07:25

LOL! Another reason not to think much of Suzee.

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JT McGee January 16, 2012 at 12:32

Don’t forget Dave!

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Tushar@EverythingFinance January 16, 2012 at 09:00

Well said JT. I don’t know what has gotten into her. For years my wife and I followed her savings advice with a lot of success. But after her “Approved card” came out and I had to say something: http://everythingfinanceblog.com/2012/01/stay-away-from-suze-ormans-approved-prepaid-debit-card.html

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Kacie January 16, 2012 at 09:26

I had wondered that about Dave’s ELP thing, and what was in it for him (a kickback, clearly). I contacted an ELP for investing advice when I was in Pennsylvania.

I was quite surprised at the fees. I declined his services because I figured I could do better — and I can.

I like Dave Ramsey a lot, but I wish he’d be more open about the ELP thing.

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JT McGee January 16, 2012 at 12:34

You know, it really is a shame. But one of the reasons that he sells commissioned advice from financial planners is because he doesn’t have to disclose it. If he were to send people to Registered Investment Advisors he would be legally required to disclose the commission structure and his incentives. As it stands there’s no legal requirement for him to do so. Naturally, he doesn’t.

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PK January 16, 2012 at 10:04

Haha, I like the reaction of @101centavos. Funny stuff.

I think that there has to be a better way to sell out. Suze should get her name on a real credit card that actually reports to the credit bureaus, while also having some features seen no where else to make it easier on a formerly indebted person.

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JT McGee January 16, 2012 at 12:37

See, that’s what I don’t understand. A prepaid debit card isn’t all that different from a secured credit card after one billing cycle. If you put the same amount on a prepaid card each month it’s like paying off a secured card every month. Obviously if you don’t keep up then you have a problem.

So I guess Suze just found the limited competition in the prepaid debit card business more attractive? Or maybe it was just that a prepaid debit card is easier to sell than any form of credit card?

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Eric J. Nisall - DollarVersity January 16, 2012 at 11:26

Actually, I would disagree with one point. Suze does know how to screw someone the right way–herself! She did it in a swift and vicious manner, and within a few hours people were all over her, with it only being a short time later when the media started pouring on.

Actually, I do kind of feel bad, but not for her, but for her loyal followers who backed her up and tweeted words of encouragement. I feel bad for them because they are sticking by her blindly while not having a single clue as to why she was lambasted. To me, that pathetic sense of loyalty, ignorance, or stupidity whatever you want to call it is grounds for sympathy, although in the worst way it can be given.

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JT McGee January 16, 2012 at 12:40

Great point!

This is actually kind of funny because there was a point where Suze went all drama queen on Twitter with quotes about perseverance or some other nonsense like that. I was waiting for her to start throwing up country song lyrics that supported her through her publicity problem.

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Eric J. Nisall - DollarVersity January 16, 2012 at 13:33

Or how people just can’t deal with a strong-willed woman revolutionizing the good ‘ol boys club of banking/credit.

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JT McGee January 17, 2012 at 09:52

Haha, that’s hilarious.

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Investor Junkie January 30, 2012 at 08:25

Or go the route of being picked on because of either her sex, or sexual preference. Which I could care less about.. Her financial advice still sucks even if she was a white male.

Getting out of debt isn’t rocket surgery.

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Andrea @SoOverDebt January 16, 2012 at 11:56

Proof of the blind trust Suze’s followers have for her – in the past week, nearly all of my search referrals have been “will the suze orman debit card help my credit” or some variation on that theme. Even though her fine print warns that the information sent to TransUnion will not appear on credit reports OR improve scores, that’s what people heard and that’s what they remember. It makes me sick. I’m not a huge DR fan either, but at least he’s waiting until people are doing well financially before he screws them over.

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JT McGee January 16, 2012 at 12:42

That really is a shame. I mean, it’s good that people are searching, but how many out of how many actually bothered to check? I mean, if Suze’s making the media rounds with big claims, I bet nine out of ten people take her word for it and maybe one person Googles it.

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LaTisha January 16, 2012 at 14:08

Zing! My main issue with Suze is that she made untrue statements about this card. I used to be a follower until a few years back when I learned a little bit more about finance and realized that she gave some pretty bad advice. But, hey, who am I? Just another idiot personal finance blogger.

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JT McGee January 17, 2012 at 09:52

We’re all idiots! That’s okay; I’d rather be a rich idiot than a poor genius.

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Investor Junkie January 30, 2012 at 08:26

@LaTisha: I agree and know of many examples from her, but can you be specific?

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AverageJoe January 16, 2012 at 14:16

I love the comparison, JT. Everyone gets paid some way and people should always find the financial motivation behind the person before following. I feel the same way about CNBC. Before I believe a talking head, I want to know what fund they represent. Really? The growth stock manager thinks growth assets are poised for a rebound? Huh…..

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JT McGee January 17, 2012 at 09:54

Hmm, let me guess – Cramer?

I totally get what you’re saying, though. Everyone has biases and a story to sell. Doctors want you to eat less. The pizza industry wants you to eat more. Whatever.

I wish more people would peek behind the curtain to see how the major players are making their money.

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Shannyn @FrugalBeautiful.com January 16, 2012 at 16:05

I am not anti-Suze like some folks, but I have to say, after this whole debacle and the name calling that ensued, I was pretty disappointed. Not only was the debit card idea totally awful and totally beneath her, but how she handled it was nothing short of horrific. I don’t know of many celebrities that take to respond to the “underlings” with such anger as she (or her rep) did…most celebrities realize it’s useless but she engaged and looked totally silly. Oy vey.

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JT McGee January 17, 2012 at 09:55

Yeah, I think that was the ultimate failure in publicity. If anything, I agree, the move should’ve been to ignore rather than respond and deflect – or respond aggressively.

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Dwight Anthony January 16, 2012 at 21:20

I really liked and enjoyed the Suze Orman show but it’s obvious she stepped up to the plate when the Kardashians decided to drop out of the credit card game and she decided to push her own pre-paid version. In reality, the loaded fees still aren’t half as bad as taking up a long term credit card that never gets paid off fully and keeps it’s master in financial doom for years.

Still, it would have been nice if this card could have done something for those that use it and pay it off, but alas it’s marketed to those who can’t seem to even open a bank account or possibly trying to hide their credit in the first place.

Dwight Anthony
Financially Elite Blog

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JT McGee January 17, 2012 at 09:56

Well the whole thing about Suze Orman’s card improving your credit is essentially a 100% lie. Sell whatever you want – I don’t care if you want to sell nuclear weapons – but don’t lie about your product to sell it.

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Jeffrey January 17, 2012 at 09:52

Both of them have a right to make money, but it’s all in how you do it and how people perceive it. Perhaps Dave is just as bad or worse, but I wasn’t even aware of his ELP program and it still sounds like less of a ploy to me than Suze’s card.

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JT McGee January 17, 2012 at 09:57

I completely agree with the first statement. Dave’s still a little shady. His ELP stuff keeps growing – check it out.

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Squirrelers January 17, 2012 at 20:41

The takeaway I have after seeing this topic just blow up in the PF blogosphere is that it’s best to think independently and critically when getting advice from anybody – simple person next door or celebrity. Simple yet important concept.

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End Wage Slavery March 22, 2012 at 16:32

What I don’t like about Suze Orman is that she is completely unrealistic on meta issues regardless of what she might have to say about individual finances.

Her advice to people who don’t like slaving away for an exploitative wage? Become your own boss! Great idea! Why didn’t they think of that? Maybe because your average wage slave doesn’t have $5 left over after paying his bills for the month let alone enough money to start their own business? Maybe because a wage slave is highly unlikely to get approved for a small business loan?

It’s like she sees what a massive pile of crap capitalism is, how it is more one-sided than a Moscow show trial in the ’30s and how it can’t survive without taking advantage of the vast majority of people but yet she still can’t bring herself to advocate raising the minimum wage to make it a living wage or something radical but necessary like transferring the ownership of businesses into the hands of their workers which would truly be the only option if we want to put an end to the exploitation of the average worker. She can’t bring herself to rip off the band-aid all at once and instead offers idiotic non-solutions that don’t bear any relation to everyday reality because offering such solutions doesn’t threaten the capitalist status quo. Get some guts Suze! Capitalism is a spectacular failure for the average person. You already realize it. Now come out and say it and offer some real solutions.

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JT McGee March 22, 2012 at 17:02

Great comment. Suze should come out in favor of raising the minimum wage to at least $50 an hour so that no one will have to be poor any more.

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