First, Justin Bieber was named “Best Celebrity Financial Strategist” of 2012.
Then came the announcement that Bieber was promoting a new prepaid debit card in partnership with BillMyParents.com – which claims to be promoting responsible teen spending habits – and that he would use his social-media power of 48 million Facebook fans and 30 million Twitter followers to promote it.
It’s not the first or worst case of a celebrity endorsing a financial product, but it illustrates the disconnect between fame and financial acumen as well as any. And while these deals are increasingly common, the hope is that the public recognizes that celebrities are not financial role models.
Sure, Justin Bieber now has a net worth in excess of $110 million, according to most sources, having grossed about that much in the last two years alone, and GoBankingRates.com gave him their “best strategist” prize on the basis of shallow analysis of his published comments and visible habits. But the truth is that while Bieber is known for being in touch with his fan base, he could not be more removed financially from the world of the kids the card is targeting.
This is not some celebrity hyping fashion, or their latest haircut; prepaid debit cards are about spending and saving money – a lesson for teenagers in developing good money habits – and the young crooner isn’t your typical teen on that front.
In fact, Bieber needs a prepaid debit card like a moose needs a hat rack. The sponsor of the card, after all, is BillMyParents.com – something Bieber probably hasn’t done since puberty.
To borrow from F. Scott Fitzgerald, “Let me tell you about the very rich. They are different from you and me.” In spite of all of his efforts to interact with his fan base, here’s how different Bieber is from his Facebook and Twitter followers.
At over $50 million a year in income, a $250,000 house would make less impact on Bieber’s finances than the cost of two tickets to one of his concerts would to the median American. According to a variety of helpful sites that calculate the feels-like effect, dropping a quarter-mil would feel to Bieber like the median American feels when spending about 130 bucks.
Now make Bieber a bit more like the teenager he is, and consider that to him, buying a $425 smartphone would feel like spending two bits, and a top-of-the-line laptop would seem to him like, maybe, 50 cents.
That, by itself, doesn’t make his debit card a bad deal. In fact, compared with others – and especially bad deals like the short-lived Kardashian Kard – terms on the Bieber prepaid debt card aren’t terrible. The monthly fee of $3.95 is kind of high, but the loading charges ($2.95 from a debit or credit card; $0.75 from a checking or savings account) are in line with the industry, and most of the other fees (50 cents per balance inquiry at an ATM, $1.50 per withdrawal, an inactivity fee of $3 if the card goes unused for 90 days, and more) are at or slightly above industry norms. There’s the very real potential for Bieber’s card to be gone soon, which would be good for the world but not great for anyone who plunks down cash to get involved. Bieber’s buddy Usher had a prepaid MasterCard deal and some gift-card promotions with Visa that have all vaporized; the Kardashian Kard was killed off once those publicity hogs realized that they were aiding and abetting a consumer rip-off, and cards from Russell Simmons, Magic Johnson and others have all fizzled.
The real problem is that while finances are highly personal, celebrity is completely impersonal – and these cards send completely the wrong message.
Want to teach children about financial responsibility while monitoring their spending and more? Fine, a prepaid debit card might do it, but the celebrity tie-in encourages the child to pull out the card and use it as much as possible, so that they get the perceived “social status” that comes with the card.
The whole point – for the card issuers at least – of issuing a Bieber card is that kids will want to show it off by using it.
Consumers need to see through celebrity for what’s happening behind it. In this case, that’s not a statement on Bieber so much as the prepaid debit card business. Prepaid cards have virtually no regulations and consumer protections – though that may be changing — and banks feeling the financial pinch elsewhere know they can squeeze out healthy margins in a business expected to surpass $100 billion this year.Chuck Jaffe is senior columnist for MarketWatch. He can be reached at email@example.com or at Box 70, Cohasset, MA 02025-0070.