Would a 2% Cashback Offer Coax You into Opening a

Would a 2% Cashback Offer Coax You into Opening a Checking Account with Perk Street Financial?

Here's a new kind of bank. Perk Street Financial, the bank, has a new plan. They are announcing a 2% rebate on every dollar you spend using your Perk debit card, out of your checking account with them. And that's not all; if you have $5000 at the opening of the business day, you'll get a Visa gift card, or gift vouchers from major retailers. If you have anything less than $5000, you'll get 1% of the cash back as reward for anything you spent during the day. It simply seems like a pretty good incentive for opening a checking account with Perk Street Financial.

Is this is really a reliable bank though? it only began to accept retail consumers opening a checking account a year ago. It works now in association with Bancorp to bring you its retail banking services. Perk Street rose up and functions today on venture capital.

This wouldn't be the first time that a bank has tried to get walk-in customers try opening a checking account with them, with the 2% cashback offer. They've tried, and they've failed; debit card issuers have found that that 2% rate is quite unsustainable. Charles Schwab did it two years ago for instance; but they haven't been able to keep it up, and they've started turning away new customers coming in opening a checking account. They hoped to make enough to offset the expense, with interest charges; they found out that it didn't really go that way.

Now how exactly does Perk Street Financial hope to sustain its plan? A debit card sucks money directly out of your checking account; there is no interest that the bank could possibly make. The answer is, that there are a few areas of revenue; to begin with, retailers that accept Perk Street Financial's debit cards have to pay the bank a fee. For every hundred dollars you spend for instance, they have to pay the bank about a dollar. And then of course, there is the $5000 minimum balance that earns them something in interest. There will be many people who will keep it above the bare minimum too, and that would be a plus. They can invest your minimum balance, or at least a part of it, in safe places that earn interest. What does Bancorp gain in of all of this you ask? It lets Perk Street Financial take care of all the shoe leather. Perk excepts the headache of creating a branch network, bringing in people opening a checking account, administering everything and so on. And Bancorp takes care of the backend.

The normal kind of rewards programs the banks have, pay far less than even 1%. Perk's 2% is generous enough that it could actually get people to switch to opening a checking account with Perk. Just imagine - if you spend $1000 every month on your Perk Street's debit card, you'll end up making about $200 in annual rewards. And that doesn't even include the bonuses that the bank will offer from time to time. And if you have at least one transaction a month, there are no administration fees you pay on the account.

Anyone opening a checking account with Perk Street will find that there are no actual Perk ATM machines. The bank though does have agreements in place with other ATM networks to allow you free access though. Perk is rather new at all of this, and there's no telling how sound its plans are. Is it possible that they plan to bring you in, and then cut you off from your rewards? It's been done before; but Perk says that they will never pull such a stunt.