PerkStreet 2% Cash Back Debit Card: A Potential Replacement for the FIA Services (Schwab) Card

If you've been following Free Money Finance the past few months you know that the FIA Services (once called the Schwab card) 2% cash back credit card is dead (or at least will be at the end of the month.) Since I found this out, I have changed my credit card strategy (which I would have done anyway since my new plan is better) and am looking for a new 2% cash back card. I had planned on it being a promotional 2% card we were offered in the mail, and I still hope that works out, but there have been some snags in the application (I'll share why with you if it turns out to be interesting) and I may be looking for alternatives.

Well perhaps I have found one.

As I've been writing about credit cards the past few months, every once in a while someone will mention something about a 2% PerkStreet card. I had no idea who PerkStreet was until I recently ran into some of their representatives at an industry event. While there, I found out that PerkStreet Financial is an online financial services company (aka, a bank). They offer a free checking account with a debit card that offers cash back rewards as follows:

• 2% cash back on all non-PIN debit card purchases for 3 months (90 days).


• After 90 days, earn 2% cash back on every non-PIN purchases when your balance is $5,000 or more or earn 1% cash back for balances below $5,000.


• 5% cash back on rotating monthly categories and merchants. The amount you can earn at the 5% cash back bonus rate is limited to $250 per household annually (starting on the day your account was opened).


• No annual fee.


• Cash back is redeemed by getting a MasterCard® Gift Card.


• You can also redeem your earnings for other gift cards or be part of their music or coffee rewards programs (which I'm not going to detail since I'm not really interested in them).

When I talked to the PerkStreet people, it was a few days after Bank of America had just announced the $5 fee on their debit cards. I asked PerkStreet about it and they said they do not (and don't plan to) charge any fees to use their debit card for purchases.

They also say the following on their site about their ATM network: "We can provide the average family the most free ATMs in the country — 37,000 of them. That's more than Bank of America and Chase combined. Plus, you don't have to make a special trip to the branch to find a PerkStreet ATM, since they're located in places like CVS®, Target®, Costco®, and Walgreens®."

So, here's the summary of the situation as well as my comments:

• 2% cash back. I like that.


• Plus 5% on bonus categories. I like that too. Too bad it's limited to $250. But not a big deal for me since I use other cards for the bonuses and not sure I'd get up to $250 on this one anyway.


• Most 5% bonus category cards offer 1% cash back as their base level, so to have a card that's both 2% cash back AND have 5% bonus categories is pretty good.


• There's no sign-up bonus for the card like there are with many credit cards.


• It's a DEBIT card -- with all the pros and cons of a debit card. Some people like them, some people don't. For the people that do, this one seems like it would blow most others out of the water. For those that don't, the rewards may be high enough to convince you to change your mind.


• The $5k balance is a different twist and a negative here. But given that no one really earns anything in interest these days, having $5,000 deposited not earning anything isn't that bad.

In the end, I will get this card if the promotional 2% card deal doesn't pan out. I like having a 2% cash back card as the #3 card in my card strategy. (FYI, if you want to see the details of why I put it as #3 and what my other cards are, check out My New Credit Card Strategy).

If you're interested in the PerkStreet 2% cash back debit card, you can get one here:

PerkStreet Financial^SM Debit MasterCard®

Comments

[Ken]

Any word from the PerkStreet people about a savings account? Back in June, PerkStreet's COO mentioned on their blog that they hoped to have the savings account rolled out before the end of the year.

[FMF]

Ken --

I didn't ask. But if you want to find out, you can reach them on Twitter. They are at @perkstreet.

[David]

I'm curious why you see this as a better deal than the Fidelity American Express card tied to a cash management account. Both would require you to open an additional account, but the Fidelity combo doesn't require an account balance to get the 2% rewards. I don't have either, but have been debating the Fidelity account.

[FMF]

David --

If you read the link above that details my credit card strategy, you'll see that I already have two Amex cards. I say there that I really don't want to have a third and hence I want an option other than the Fidelity Amex.

[Rajs]

I gave up Schwab and started using Capital One Venture card which gives 2 miles per dollar. The miles can be applied to travel transactions on the statement (effectively cash). There is a annual fee starting from year 2 of $59.

[Matt]

I've been using the Discover Escape Card. It also offers 2 pt/dollar of spend which equates to 2% cash back on travel expenses. You don't redeem the points for travel like some cards, but rather when you charge a travel related expense on your Discover Escape, you can request a statement credit with the points you have built up. That means you can shop for the best travel rates and not need to book through the credit card's rewards search engine. So, you need some travel charges to get the full 2% benefit, but in practice, a hotel here and there more than covers it. Also, that means you're earning points even when you book travel and redeem a statement credit unlike some cards.

I thought Discover wouldn't be accepted as many places, but I've found only 3 places in the last year that didn't take Discover.

Down sides?

1.) $60 annual fee. (Offset right now with the bonus: 1k points($10)/mo for the first 25 months you make a charge)

2.) Discover isn't really accepted internationally. Good for day-to-day spending, though.

So, yeah, the annual fee sucks, but more than offset, IMO, by the benefits. Plus, you have all of the protections afforded to you by a credit card like grace periods and security protections which a debit card would not have.

[Matt]

I should also note that you can redeem your points on the Discover Escape for statement credit if you DON'T have any travel related expenses booked on the card, but the redemption rate is effectively 1%. Thus, you need some travel charges occasionally. Like I said, a hotel here and there or a plane ticket from time to time and you're ok.

You can also redeem for gift cards at a rate between 1% and 2%.