Celebrity personal finance expert Suze Orman, who has appeared widely for NCUA on behalf ofcredit unions, has launched a prepaid debit card which, if itbecomes truly popular, could wind up costing credit unionssignificant amounts of money.

Unlike traditional debit cards which make their issuers, such ascredit unions, a small amount of money from card interchangewhenever they are used, decoupled prepaid cards rely on ACH transactions to move moneyfrom card holders' deposit accounts with financialinstitutions. Orman's Approved Card may also be fundedthrough direct deposit and cash deposit, but to the extent that itis run as a decoupled debit card it will take money away from CUand bank debit card programs.

There is also a question about whether the card will actuallyearn some interchange revenue. One of the benefits that Orman toutsfor the Approved Card is that cash deposited on the card is insuredby the FDIC. It carries that insurance because the card is issuedby Bancorp Bank, a leading issuer of different types of credit andprepaid cards and which almost certainly participates in theinterchange system. Card organizers have not yet replied to arequest for further information about the card.

The card has debuted to mixed reviews. Ondine Irving, founder ofCard Analysis Solutions, worked with Orman from June to October2010 and said she does not back the Approved Card.

“I am not a supporter of the card and time will tell if thepublic accepts it,” Irving said. “Based on the feedback on Twitterand Suze's Facebook page, her followers are disappointed in herdecision to peddle yet another product, but this time with her nameon it. The $36 annual fee, collected at $3.00 per month is notsitting well with consumers.”

She also noted the card does not introduce unbanked card holderto the banking system. “The Suze Orman prepaid card does nothing toestablish a full service banking relationship,” Irving observed.“And as much as people may have hatred for banks and less forCredit Unions, the fact remains lending is a part of the Americanway of life. Credit Unions establish and foster lifelongrelationships with members to service all of their financialservices needs- and a prepaid card is a stop gap measure and in noway will ever replace full service relationships.”