With the new debit card fee regulation that's now scheduled to take effect on October 1st, some might have concerns about PerkStreet Financial's checking account which rewards customers between 1% to 5% cash back on their non-PIN debit card purchases. PerkStreet Financial developed this internet checking account and debit card rewards program over 2 years ago. It partnered with The Bancorp Bank in Delaware which holds the deposits. The COO of PerkSreet, Jason Henrichs, recently answered some questions about the company in this PerkStreet blog post. One of the questions concerned how the debit card fee regulation was going to affect PerkStreet. Here was Jason's reply:
You’ve probably heard about the impending legislation that has caused most banks to drop their debit rewards programs and hike fees, and might be wondering if it will impact PerkStreet in the same way. We don’t believe so – based on the current implementation of the new rules, we think we’ll be able to offer the same 2% back with great service and no monthly fee. We’ll continue to watch this closely and will communicate any changes we anticipate before we make them. No matter what, we’ll stick to our core philosophy of giving customers huge value for being responsible.
One thing that helps PerkStreet is that The Bancorp Bank is well under $10 billion in assets, so they should be exempt from the debit card fee cap. However, like I said yesterday, there are concerns that smaller banks will eventually be hit with reductions in interchange fees. I'm sure that's why Jason included in his answer that they will "continue to watch this closely and will communicate any changes".
One new thing we should soon see at PerkStreet Financial is a savings account. Here is what Jason had to say about this:
Yes! Building a savings account is also a top priority for us. Makes sense, since saving is such a big part of living a better financial life. We’re working hard with our banking partner to develop a savings program that makes sense for our customers and aligns with our vision, and we hope to have it rolled out later this year.
It will be interesting to see what features the savings account will have and how competitive the rate will be. It will also be interesting to see if the savings account can be used to meet the balance requirements of the checking account. Currently, to qualify for the 2% unlimited cash back on debit card purchases, customers must maintain a minimum checking account balance of $5,000. If the balance drops below $5,000, the cash back is only 1%. The downside with the PerkStreet checking account is that it doesn't offer any interest. So if you are maintaining a $5,000 balance, you're losing a significant amount of interest. This downside is becoming less of an issue as rates fall. For example, with a 1% APY, the amount of interest earned on a $5K balance over one year is only $50 (before tax). It only takes $2,500 in spending with 2% cash back to equal the interest.
I have more details about the checking account and rewards program in my PerkStreet Financial checking account review post.