With interest rates so low and with new debit card fees at large banks, PerkStreet Financial is now a better option for those who like debit cards. PerkStreet Financial's checking account and debit card reward program is similar to credit card cash back programs. You get a percentage cash back on each debit card purchase. Below are the levels of the rewards:
- 5% cash back (limit $250/yr) when you shop at stores included in categories that change monthly
- 2% cash back everywhere for the days your checking account balance is at least $5K (or first 3 months)
- 1% cash back for all other cases
Purchases must be signature-based (non-PIN) to qualify for the rewards. The cash back rewards come in the form of gift cards. Some of the selections include MasterCard, Target and Amazon.com.
Comparing PerkStreet Rewards with Others
The downside with the 2% cash back is that it requires you to maintain a $5,000 balance in PerkStreet's checking account which earns no interest. With interest rates so low, this may not be a major issue to you. For example, one of the highest interest rates on a regular checking account is 1.11% APY at Incredible Bank (as of 10/10/11). Losing out on this interest on $5K will cost you $55.50 in a year. The amount you get from the extra cash back rewards may offset this.
The other option for debit card users is a reward checking account. For those who have seen their reward checking rates fall and don't like the hassle of the monthly requirements, PerkStreet may now be a better option. One complication is that you won't want to keep too much in your PerkStreet checking account since it doesn't earn any interest. So you'll want to link it to a savings account. PerkStreet Financial has plans for its own savings account for later this year so that may simplify things.
Future of Debit Card Rewards
Since PerkStreet Financial's rewards are based on debit cards, there are concerns that the rewards may be affected by the new debit card regulation. As I mentioned in June, PerkStreet's COO didn't think the regulation will have an impact on them. One thing that helps PerkStreet is that its bank partner, The Bancorp Bank, is well under $10 billion in assets, so they are exempt from the debit card fee cap. This NYT article has more recent discussion of how the debit card regulation may impact both PerkStreet and reward checking accounts.
PerkStreet Financial Checking Account Overview
Below is a summary of the features of the PerkStreet Financial checking account:
- $4.50 monthly fee can be avoided by using the account (debit card usage, writing a check that clears the account, using Online Bill Pay, initiating a withdrawal or making a deposit to the account)
- No interest
- No minimum balance requirement
- First book of checks is free
- No fees for ATMs within the STARsf network ($2 fee for other ATMs plus any fee the ATM owners may charge)
- ACH bank-to-bank transfer service
- Free check deposits with overnight delivery at 3,400 UPS and Mailboxes Etc locations
- Postage-paid envelopes to mail in checks
- Deposit cash free using MoneyGram Express Payment
PerkStreet Financial Overview
According to the PerkStreet Financial's website, banking services are provided by The Bancorp Bank which is a FDIC member. The bank has an overall health score at DepositAccounts.com of 4 stars (out of 5) with a Texas Ratio of 12.30% (above average) based on June 2011 data. Please refer to our financial overview of The Bancorp Bank for more details. The Bancorp Bank has a been a FDIC member since 2000 (FDIC Certificate # 35444).