The Biebs, Educating His Audience About the Dangers of Excessive Debt
Image from Flickr User Joe Bielawa
Following in the footsteps of rap mogul Russell Simmons and being-famous moguls the Kardashian sisters, being-adorable mogul Justin Bieber has endorsed a pre-paid debit card. Hard-hitting journalists at Entertainment Tonight were so excited by this news that they are running a commercial for Bieber's card as a news story. The New York Times does a bit more digging, and from their story we learn that he's endorsing the SpendSmart card, and that:
"SpendSmart fees include a monthly fee of $3.95; loading fees of $2.95 from a credit card or 75 cents from a checking account (a single scheduled monthly automatic payment from a checking account is free); $1.50 to withdraw from any A.T.M. (in addition to A.T.M. surcharges), and 50 cents for an A.T.M. balance inquiry; $7.95 for a replacement card; and $3 for 30 days of inactivity."
SpendSmart also features "a number of features intended to teach teenagers financial literacy while enabling parents to monitor them." As part of the card's rollout, The Biebs himself recorded a video telling kids that spending more than you have isn't smart, and that budgets are cool. Adorable.
If I can, I'd like to get in on the act and offer some free financial advice to all the Beliebers out there:
- $3.95 x 12=getting ripped off for the privilege of letting someone hang on to your money.
- Banks will PAY YOU to hold onto your money! That's called interest and interest > fees.
- Cui Bono? Oops! Different subject, this is Latin and it means "who benefits?" This is an important question to ask in almost all financial transactions. If you get this card, will paying $50 for something that's free elsewhere benefit you? Or will it benefit the Biebs, who is getting a reported $3.75 million for endorsing this card, plus stock options?
Now, nobody's forcing anyone to do anything here, and there may well be some parents out there that think $50/year is a bargain for getting text messages about their kids' spending. That's fine, pay that price for that service. But there's something very troubling about financial education being provided through a fee-laden product. Is the first lesson going to involve the words "Avoid Predatory Products?" Will any lesson tackle such a subject? I don't want to come down too hard on the Biebs, but if he was your boyfriend he'd tell you to go to a bank, or better yet a credit union, and get an account. That way you could avoid all these fees and start earning interest. In time, you could move on to more serious subjects, like saving for college and building a helpful credit history.