Tuesday, January 11, 2011

Celebrity Endorsements On Credit Cards?

Influence is defined by Webster's Dictionary as the capacity or power of persons or things to be a compelling force on or produce effects on the actions, behavior, opinions, etc., of others. When it comes to influencing others, celebrities play a huge role in millions of Americans lives. That being said, below is an article that I believe you will enjoy that deals with influence and celebrities.

Greasy burgers and credit cards seem to operate in different orbits, but it’s no coincidence that America faces both an obesity epidemic and $852 billion in credit card debt. Fast food and credit are available in excess, and both stand to cause long-term damage to young adults if abused.

“When you introduce a product to a fertile audience, that establishes a relationship with brands,” says Cliff Courtney, chief strategy officer at Zimmerman Advertising, an advertising agency based in Fort Lauderdale, Fla. “This is what the fast-food industry and credit card marketers want to do at the time when teens are fertile. But we see the fallout, and it comes back full circle. You are handing them the opportunity to damage themselves.”

The tanned faces of the Kardashian sisters, the brooding mugs of the Twilight stars and even global icon Hello Kitty have all appeared on prepaid debit cards and gift cards as of late. Stars that are known for their smarts are rarely featured in advertisements, according to Courtney, which he says is unfortunate because they would be better advocates for responsible spending.

“Kim Kardashian lives in the world of pop culture. She offers no advice about how to manage money. It is saying, ‘You don’t have to go to a great college, study, or do anything but look good, wear dresses and lend your name to any marketer who wants to make a quick buck,” he says. “I would rather see someone like Jesse Eisenberg, who just played Mark Zuckerberg [in The Social Network] saying, ‘Hey I am smart and financially responsible.’ The people who are equipped are not who teens are interested in, because they are not sensationalized.”

But marketing such cards to teens isn’t an unfair move for advertisers, according to Laura Levine, executive director of Jump$tart, a financial literacy organization for young adults. She says the responsibility lies with parents to ensure their children are getting the right message about spending from a young age, celebrity endorsement or not.

“If credit and debit cards are being used as a tool to teach people how to manage money, we have to be careful not to expect them to do the teaching for us,” Levine says. “It’s not the card that is going to teach them.”

Using famous figures like the Kardashian sisters is targeting those who have an interest in pop culture, but in the end, it is the parent who makes a decision about whether or not it is appropriate for their children to use the product, says Levine.

“Their image is glamour, high-end, and the connotation probably is to spend like the Kardashians. We need to see education of young consumers and parent involvement regardless of who is on the card.”

The Kardashian Kard hit the market on Nov. 9 and was loaded with fees, including a $7.95 monthly fee, $1.50 ATM fee and an additional $1.50 to speak with a customer service representative. The reality star sisters withdrew their endorsement three weeks later after regulators deemed the card predatory. The trio now faces a $75 million lawsuit for contract breach, from the Revenue Resource Group, LLC, which created the card.

Adam Levin, chairman and founder of Credit.com, says inspiring kids to get educated about finances early on remains a struggle, and celebrity endorsements are hardly the ticket. Prepaid debit cards often charge their holders hidden fees, and can be unloaded quickly, so the lessons attached to financial literacy go untaught, says Levin.

“I am a great believer in opening a bank account for a child and having a card attached to it,” he advises. “That way you look over the statements together. That is something more positive than prepaid debit cards, or secured credit cards where you make a deposit and it can’t exceed what is in the account. An account will help you build credit, prepaid cards will not.”

A figure like Kim Kardashian can be used to teach kids about responsible spending, if she is marketed properly, according to Courtney. Instead of just putting her face on the card, have her explain to teens and parents how they can use such a card to be financially responsible.

“Use the popular mouthpiece,” he recommends. “But put a script on the table that helps teens, not just tries to take advantage of them.”

Levin says no matter who graces the front of a credit or debit card, knowing about hidden fees on prepaid cards is key to saving yourself or your child from financial woes.

“If these cards can get people into the mindset that ‘This is a serious instrument, not a piece of plastic where you get things and one day down the road pay for them,’ then that is great,” he says. “If you do anything in the credit or non-credit world that is prepaid, you need to read the instructions. What you don’t know can really hurt you.”

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