Perkstreet Financial is a new company based in Boston that is offering a checking/debit card combo that offers 1% cash back and other perks for purchases made on the card. The checking account has no fees and no minimum balance, with lots of free ATMs via a 37,000+ network.
This is all pretty much taken for granted for an online account. The checking account itself offers no interest but Perkstreet provides an alternative, a debit card which pays 1% cash back, free music, or coffee. The 1% cash back is very attractive for a debit card. According to a BAI/HItachi 2008 Study of Consumer Payment Preferences the average debit card offers .04% in rewards and only 17% of debit cards even offer rewards .
If you prefer a debit card over credit (as more and more people do today) then the account may be good for you. In fact, the 1% cash back may earn you more than the interest in a checking account, even a high yield, rewards checking account. The example below illustrates what I mean:
Rewards Checking Balance Debit Card Usage/Month
The example assumes that your money is in a regular checking account, in which case the 1% interest is generous. A rewards checking account can earn you 4% but even at the rate, the debit card option is better. The example also assumes you’ll put some serious expenses on the card, to the tune of $1,500 per month. That might include tuition, rent, groceries, car payments etc. But even if amount spent came down to $500, you’d still be ahead.
There is no monthly spending limit on the card.
The 1% is comparable to some credit card reward programs. Laurie McLachlan, Perkstreet’s Chief Marketing Officer told me that they can afford to offer rich rewards because they don’t have the expense of brick-and-mortar operations. “U.S. banks spend over $80 billion a year to build and keep their branches open. Our customers prefer to bank online, so we invest our money in what really matters,” she said.
Perkstreet began offering the checking account in September 2009. While the company is new, all money is held by The Bankcorp Bank. The Bankcorp Bank of Deleware is rated 4 out 5 stars on Bauer Financial for its safety and soundness, is FDIC insured, and trades on the Nasdaq under the symbol TBBK. Perkstreet was funded by Highland Capital, a well known name in the Venture Capital and Private Equity arenas.
So is Perkstreet right for you? If you prefer to use your debit card to make purchases versus a credit card then it might be. To sweeten the offer, Perkstreet is also currently offering $50 to open an account.