A Basketball Hall of Fame member known for his passing skills is aiming to assist customers who don’t have traditional banking services.
Last week, Earvin “Magic” Johnson announced plans to endorse a new prepaid card appropriately named MAGIC. The former Los Angeles Lakers superstar and three-time NBA MVP is partnering with California-based One West Bank for the card, and he’ll be hitting the road this month to promote the piece of plastic.
If you’re a regular reader, you know that Johnson isn’t the first celebrity looking to appeal to the unbanked population. From reality show stars to entertainment moguls, plenty of big names have backed alternatives to carrying cash or opening a bank account. The unbanked population is big — around 9 million, according to the Federal Deposit Insurance Corp. — and it represents an opportunity to turn big profits.
As banks, card issuers and big names like Johnson look to cash in on that opportunity, prepaid debit cards have soared in popularity. In the personal finance world, prepaid cards have a less-than-stellar reputation. With a lack of regulation, some of these cards have very high fees and few forms of protection. The basic fee structure of the MAGIC card looks fairly simple: a $4.95 fee to open the card and a recurring $4.95 monthly fee.
There are some additional fees that can add up based on your personal preferences. If you sign up for the card, you’ll only qualify for one free customer service phone call each month. After that initial conversation, cardholders will pay $2 for each call. You’ll also pay 50 cents for checking your card’s balance at an ATM.
Of course, avoiding add-on fees has become a routine for traditional banking customers, too. Some institutions now charge for access to tellers, and fees for failing to meet minimum balance requirements are becoming the norm for customers at big banks.
What do you prefer, a prepaid card or a checking account with a regular debit card? If you’re in the market for a prepaid debit card, check out Bankrate’s exclusive Prepaid Debit Cards Survey.