In a disturbing new celebrity trend, famous Americans have begun marketing their own prepaid debit cards, which promise people with low credit access to instant cash.

The prepaid debit cards range from the flashy (the Kardashian sisters developed a famously awful line of prepaid cards) to the more respectable (financial advisor Suze Orman has built her own line of cards).

Still, despite celebrities’ hawking of their financial tools, some experts believe that these cards only represent a one-way ticket to debt, and eventually personal bankruptcy.

Prepaid Debit Cards Raise Controversy

According to the Wall Street Journal, celebrity-sponsored prepaid debit cards may pose unique dangers for individual consumers:

• Busts and scams. On the negative side of the ledger are controversial prepaid debit cards launched by, among others, the Kardashian sisters and hip-hop king Russell Simmons. The Kardashians withdrew their cards from the market after consumers discovered ridiculous fees, including an $8 monthly maintenance charge.
• More reputable cards. On the other hand, financial guru Suze Orman recently launched her own prepaid debit card, but claims that its fees are reasonable. But these fees can still add up—Orman says there will be a $3 activation fee, a $3 monthly maintenance fee, and a $3 charge for every call to a customer service representative.
• Criticism of Orman. While Orman trumpets her relatively low fees, industry observers claim that these fees will still squeeze money from people who use the cards, ultimately resulting in a financial loss for low-income consumers.

Prepaid debit cards have gained a lot of traction recently for a few reasons. First, many of them are exempt from the “swipe fees” incurred by retailers when consumers use debit or credit cards, so they are popular with merchants.

In addition, Orman promises that she will eventually convince credit reporting agencies to use information from consumers’ habits with prepaid debit cards to help improve their credit rating.

Currently, low-income consumers have a difficult time establishing a good credit score without owning a credit card or taking out a new loan.

So, consumers like prepaid debit cards and merchants also appreciate the absence of swipe fees. The question remains, though, are these ultimately good for consumers?

Unfortunately, only time will tell whether these novel financial instruments will be good for consumers or lead more people into debt.

The one thing observers can say with confidence is that consumers should not sign up for these cards simply because they are promoted by a celebrity.

On the contrary, celebrity-sponsored financial tools should be eyed with even more caution than other financial instruments. After all, if these cards are so valuable, why can’t they sell themselves, without the aid of celebrities?

Savvy consumers should analyze the possible pros and cons of prepaid debit cards, so they can avoid having to seek emergency debt relief if the cards prove to be a financial burden.