Perkstreet Financial is relatively new, but they’ve already tried a bunch of different ways to make their online checking account attractive, from sign-up bonuses to coffee awards. However, I think they’ve stumbled onto something with their new cashback debit card rewards structure that beats out any other online bank currently:
- Earn 2% cash back on all non-PIN debit card purchases when your checking account balance is $5,000 or more. For new accounts, you will earn 2% cash back no matter what your balance is for the first 3 months, starting on the day that your account is opened. (Otherwise if your balance that day is below $5k, you earn 1% cash back.)
- Earn 5% cash back at a rotating set of retailers. This appears to be the new trend amongst many rewards cards. For October 2012, you can get 5% cash back at The Cheesecake Factory®, Pottery Barn®, Pottery Barn Kids®, PotteryBarn.com, Ace Hardware®, AceHardware.com.
- PowerPerks 2.0 with deals updated every week
- There is no limit to the amount of cashback you can earn.
Fees. The account has no minimum balance requirement, but does require you to have some sort of activity each month to avoid a $4.50 inactivity fee. Be sure to have some sort of deposit/withdrawal (electronic transfer is fine), debit card purchase, online billpay, or a cleared check every month.
The checking account earns no interest, so you’ll have to account for that based on your usual average balances. On the website, it advertises that you could earn $600 in rewards each year. Here’s their rationale:
Making $601 in weekly non-PIN purchases will earn you $625 in perks annually (when you maintain a balance of $5,000). According to the U.S. Bureau of Labor Statistics, the average American household spends $601 per week on purchases that could be put on a debit card, including stuff like utility bills or rent.
I’d adjust your expectations according to your own situation. I’ve never had a landlord that let me charge my rent on a debit/credit card, although I’m sure some are out there. 🙂 Example: Charging $500 a month at 2% back would be $120 a year.
Opening an account. They do try to make it easy… you only need $25 to open, and you can even do your initial funding on a credit card for up to $500; they promise to run it as a purchase to avoid cash advance fees.
For folks who already have a their preferred set of cashback credit cards, this might not be enough to switch. However, this does serve as a nice alternative for the subset of folks who choose to avoid credit cards for whatever reason. I have lots of friends that prefer debit cards due to the sheer simplicity of it – they buy something, and the money gets taken out direct from the checking account. Done. No extra bills to pay. I just read that 50% of all charge card purchases this year will be done on debit cards, so they aren’t alone.
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Jonathan,
What is the interest rate on the checking account? That is important since you need to tie up at least $5000 in order to get this 2% cashback.
With new regulatory rules coming, I am going to wait for the dust to settle before deciding on any new checking account. Supposedly, the era of free checking is coming to an end. http://finance.yahoo.com/banking-budgeting/article/109846/end-to-free-checking?mod=bb-checking_savings
I used to have an account but closed. beware of $4.95 inactivity fee.
If I can get 2% on Schwab card why should I bother with any debit card?
Saw this as well:
Use your PerkStreet FinancialSM Visa® Debit Card to make a non-PIN debit card purchase at any Apple® Store between Thursday,June 24 and Sunday, June 27th, 2010 and get 5% cash back.
Wow!
5% cash back at the Apple Store is pretty good money.
As for the people saying free checking is going away: I definitely see reward checking accounts hanging around for a while.
Basically, big banks are getting red of basic free checking.
My rent can be paid with a debit card but not a credit card. I might get this card just for paying my rent. That would be about $400 cash back a year for me. Enough to justify getting another card by my standards.
http://www.depositaccounts.com/blog/2010/06/new-debit-card-cash-back-policy-at-perkstreet-financial.html
“The downside with maintaining a $5,000 balance in their account is that it earns no interest.”
That would kill any increase from 2% rewards for me.
Hi Eric,
I’m Jenna Walker and I work for PerkStreet Financial. While many people choose a checking account based on interest rate, the truth is, without a ridiculously high balance it’s nearly impossible to earn anything meaningful. Also, your checking account balance goes up and down as you spend, so the interest you’re earning on your account is on a smaller balance than you might think.
In checking bankrate.com today I see that the highest advertised APY for an internet-based checking account is 1.1%. With an average balance of $5k, this will only get you $55/year. At PerkStreet, you’d only have to spend $250/month to get the same amount back every year. The average American spends more than this and would get a better deal with PerkStreet. On top of that PerkStreet gives customers access to the largest surcharge-free ATM network in the country and the account is free.
I’d love to know what you think.
The critical question really is: with that example, we rather have average balance for the year of $5k and spend $250/month to get our 1% or higher depending on the credit card we use!
There are several problems with this bank, so I would warn potential customers to be aware of the fine print. Although PerkStreet’s website has the appearance of being clear about their policies, I found that not to be the case. These “fine print” policies seem designed to (1) make it difficult to move money out of the account, and (2) to limit the cashback that you can earn. Below are examples.
(1) They have a limit of $1500 on incoming online transfers in an entire *month*! They don’t tell you about this anywhere except when you actually try to move money into your account. When I called them about it, they said that they have this restriction for new customers and I was still in my first month. After a couple more calls, I realized that they will increase this limit to $2500 after six months.
Stated reason: Security.
Suspected motive: To limit the amount of money you can spend to get cashback.
(2) They have a limit of $500 on outgoing online transfers. So, say you move $5000 into your account to get 2% cashback. You are stuck with that money with them for the rest of the month (unless you adopt a slower paper check route).
(3) They have a limit of $1500 on daily expenses and explicitly say on their website that it can be waived simply by making a phone call. I had to book two one-way international flight tickets that cost a total of over $1500. I booked these and called them to waive the limit. They refused to do so because I was still in my first month. There is no notice about waivers not being allowed in the first month anywhere. As a result, I have to now spend much more money re-booking that ticket just because PerkStreet does not allow me to spend my own money.
Stated reason: Security for new customers. They claim that all banks have spending limits on debit cards. Really? Bank of America did not.
Suspected motive: Limiting spending => limiting cashback.
(4) When I tried to circumvent the limitation in (1) above to move more money into my account using FedEx, there was another surprise! The first FedEx check takes not 1 day as stated, but about 9 days for some reason. Again, some vague security reason that is incomprehensible to rational beings is given as an explanation.
Bottomline: It is not easy to get much cashback because of their restrictive policies on what you can do with your money. And they make it harder to move money out of the account while not giving any interest on it. As for the 5% cashback, they are on such specific and tiny items that I have never been able to get 5% cashback so far.