Another celebrity is entering the prepaid market: Magic Johnson.
The NBA Hall of Famer is entering a partnership with OneWest Bank, FSB and introducing a reloadable prepaid MasterCard. The "Magic Card" targets people who don't have a traditional bank deposit account.
Johnson may be able to capitalize on his past athletic fame and current broadcasting position to generate some buzz for his card. The card's introduction begins with a Magic Card National Tour in July, where consumers sharing their most inspirational story on YouTube can win an opportunity to meet with Magic Johnson.
Historically, two of the drawbacks to prepaid cards are the high fees associated with their use and the inability of the cards to help consumers build their credit scores.
This new card may not have enough magic to overcome these two drawbacks.
While the fees on the Magic Card may be more reasonable that some prepaid cards, there are now a number of prepaid cards with lower fees.
The Magic card has a set-up fee of $4.95 and an on-going monthly fee of $4.95. The first customer service inquiry is free, but subsequent inquiries cost $2 apiece. There is a 50-cent charge to check your balance.
The card is being introduced at a time when the prepaid market is significantly expanding. According to Javelin Research, prepaid use grew 18% in 2011 compared to 2010.
A number of celebrities have entered the prepaid card industry, including the Kardashian sisters, Suze Orman and even cartoon characters. In addition, several major card issuers have also introduced prepaid cards: Chase began testing its Liquid Card in May in 200 branches throughout the country; and American Express entered the prepaid market in June of 2011.
Orman's card has a set-up fee of $3 and a $3 monthly fee. The American Express prepaid card has no activation or monthly maintenance fees. Chase Liquid has a flat monthly fee of $4.95.