PerkStreet Financial has recently announced to its customers that it's making changes to its debit card cash-back program. Those who have maintained a $5,000 balance so that they could earn unlimited 2% cash back may be disappointed. However, those who haven't been able to maintain a $5,000 balance may be happy with this change. The changes are scheduled to take effect on April 4th, 2012. Here's a summary of the new cash-back program as described on PerkStreet's blog:
- Unlimited 1% cash back for non-PIN purchases
- 2% for online purchases at some of your favorite retailers
- 2% for in-store purchases at those retailers when your balance is above $5,000
- 2% cash back when you and a friend both pay with your PerkStreet cards together at the same restaurant, bar, or coffee shop
- 5% PowerPerks at places you choose every month
Some of the retailers listed that will qualify for the 2% cash back include Walmart, Target, BestBuy, Amazon and Apple.
Another change will be a big downside for some. The change is that the 2% cash back will no longer be unlimited. There's a limit of $5,000 in purchases per year that can earn 2% - $2,500 for online purchases and $2,500 for offline purchases.
Another change is that PerkStreet will no longer offer MasterCard Gift Cards as a redemption option. Customers will be able to redeem perks directly into their accounts, but it won't be for the full amount. For every $22 in perks you redeem, they’ll deposit a $20 account credit into your account. They are able to give the full amounts as gift cards since they get a discount when they buy gift cards.
According to PerkStreet's CEO, Dan O'Malley, "over 90% of our customers aren’t earning 2% cash back." My guess is that most readers of this blog are probably in the 10% category. If you're in that boat, I'm afraid you will probably earn less.
Comparing PerkStreet Financial to Other Alternatives
The people who have been best suited for PerkStreet Financial are those who prefer debit cards over credit cards and don't have large balances in their checking accounts. These people may benefit from this change since they'll be able to get 2% cash back from several online retailers.
Those who prefer credit cards may have a hard time to justify PerkStreet after these changes. There are many credit cards that offer over 1% cash back. With the 2% cash-back annual cap of $5,000, customers can only earn up to $50 more per year than they would with just 1% cash-back.
Those who have large savings that they want to keep liquid can probably do better in reward checking accounts. For example, if you have $25K in a 2.00% reward checking account, you'll earn $500 per year from interest. That's at least $250 more than keeping that $25K in most internet savings accounts. You can get a higher rate than this. Please refer to our reward checking table to find the best rate that's available to you.
PerkStreet Financial Checking Features
PerkStreet Financial's checking accounts do have several nice features such as free ATM usage (in the Starsf ATM network) and many easy ways for making deposits. One unique deposit feature that I haven't found at other internet banks is a free way to make cash deposits. PerkStreet customers can deposit cash free using MoneyGram Express Payment. According to PerkStreet there are "18,000 locations nationwide, including every Wal-Mart store.
There is no minimum balance requirement. There is a $4.50 monthly fee if the account is inactive. This 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).
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 12.21% (above average) based on December 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).
Update 7:00pm The NYT Bucks blog just reported on this change. The article and the comments provide some interesting insights about if there's more to this change than what PerkStreet disclosed.