Cash back debit cards aren’t exactly brand new on the financial product scene, but this month one such card is making strides to prove it’s ready to run with the big dogs.
PerkStreetSM† announced last week it will now offer 2% cash back on all non-pin transactions for cardholders who maintain a $5,000 balance.
Everybody earns 1% cash back with no minimum balance.
Users can also earn 5% cash back at select merchants and in rotating categories (this summer it’s ice cream, home improvement, and gas).
PerkStreet has partnered with the Bancorp Bank to provide many of its banking services, including FDIC insurance. Users can simply deposit money electronically or mail checks in—or send checks overnight, for free. PerkStreet also has a nationwide network of fee-free ATMs and provides free checks. It takes a minimum deposit of $25 to open an account.
“If you’ve been spending on credit cards just to get rewards, this is the alternative you’ve been looking for. Imagine, finally being rewarded for spending wisely,” says PerkStreet Financial CEO Dan O’Malley.
In my opinion, offering 2% cash back on everything is pretty bold, because it beats many credit card rewards programs. Even the best credit card rewards only pay more than 1% cash back on certain categories or when you reach certain spending levels. And many charge an annual fee.
At the same time, this benefit blows away interest-bearing checking accounts.
With a PerkStreet card an a $5,000 balance (so you earn 2% back), if you spend $1,000 a month, you’ll earn $240 cash back in a year. $1,500 a month equals $360 a year. $2,000 a month gets you a cash reward of $480.
How can they afford this?
Well, that’s the power of interchange fees, those small percentages of each transactions that merchants (and, in turn, we the consumer) pay each time we buy something with plastic. In rewards debit cards and credit cards are just paying us back money we paid them in the form of these interchange fees.
But that’s the game, and cash back cards like the PerkStreet debit card are a way to win it.
One note of caution about debit cards: Unlike credit cards, if your debit card is stolen, the thief is taking money right out of your bank account, and the bank may take days or weeks to return it to you. Also, credit cards help you build credit; debit cards do not. (Kind of important if you’re starting out and want a mortgage someday). Credit cards can also help you resolve disputes with merchants…and you don’t pay until the problem’s resolved.
If you’re worried about going into debt with a credit card, however, that’s more than enough reason to stick with debit cards. And if you can earn 1-2% cash back while debiting…why the heck not?
Learn more about PerkStreet or open an account now.
The PerkStreet Financial Visa® Debit Card is issued by The Bancorp Bank pursuant to a license from Visa U.S.A. Inc. This site may have a financial relationship with PerkStreet Financial. For more information, read our disclosures.
About David E. Weliver
$5,000 balance in a checking account?? Ha ha, dear god, I’ve never seen that money all at once unless I owe it! Great, more rewards for the fortunate ones!
Hi, I’m Jenna Walker and I work for PerkStreet Financial. While you are right that people with higher balances can earn more rewards, even those with lower balances still earn 1% cash back. At 1%, PerkStreet offers the most debit card rewards available anywhere and matches what most rewards credit cards offer. Like you, I cannot afford to maintain a $5,000 balance but I like earning rewards just for buying what I normally would.
$5,000 balance? Most Americans don’t have $5k sitting in their accounts.
If i have $5,000! i can fulfill my dream!
To have $5k sitting on a checking account and not in an interest bearing account is stupidity. This is just impractical because given these economic times $5k is a lot of money.