PerkStreet Financial is known for its unique MasterCard Debit Card that gives you up to between 1 and 5% cash back on your purchases. It’s been promoted all over the web – on blogs, social media, and in the news. It has proven to be a great value to many people who earn hundreds of dollars in cash back without forcing them to change their shopping habits – but is that the case now?
PerkStreet Financial Changes . . . When?
Changes are taking place on April 4th, 2012, and some people are quite upset. No doubt, the changes are controversial and the debate? Heated.
I thought now would be a great time to do a review of the changes to PerkStreet’s program, and be just as honest as I was in my full length review of PerkStreet.
My Relation to PerkStreet
I’m going to be straight up with you. I know the PerkStreet team very well. We have had phone and email conversations, I’ve written for their StreetSense series, I write regularly for the PerkStreet Blog, and I’m an affiliate for their checking account.
While I do make money promoting PerkStreet, integrity is my highest priority. Read my analysis and decide for yourself if I objectively reviewed the changes.
Let’s start with the facts. Later, we’ll get to how this changes my family’s finances and how they’ll affect yours as well. If I’m missing something, let me know in the comments.
The Old PerkStreet Perks Program
Here is what the old program looked like:
- 1% cash back on all non-PIN purchases if your checking balance is less than $5,000 at the start of the day.
- 2% cash back on all non-PIN purchases if your checking balance is $5,000 or more at the start of the day.
- 5% cash back (called PowerPerks) on all non-PIN purchases when you shop at select retailers announced on PerkStreet’s blog, Facebook, and Twitter accounts.
The New PerkStreet Perks Program
The new program looks like this:
- 1% cash back on all non-PIN purchases at any balance you have in your checking account.
- 2% cash back on all non-PIN purchases you make online at Amazon.com, Apple.com, iTunes, Walmart.com, Target.com, and BestBuy.com. You can also make 2% when you and a friend both pay with your PerkStreet cards together at the same restaurant, bar, or coffee shop. And, if you still want to maintain a $5,000 checking balance, you can get 2% cash back online and offline at Walmart, Target, Best Buy, and Apple stores. You can earn 2% cash back on $2,500 worth of purchases online and $2,500 worth of purchases offline.
- 5% cash back (called PowerPerks) on all non-PIN* purchases when you shop at select retailers announced on PerkStreet’s blog, Facebook, and Twitter accounts. You can earn 5% cash back on $5,000 worth of purchases in PowerPerk categories.
Instead of being able to redeem your perks for a MasterCard gift card, PerkStreet now offers an account credit option that gives you $20 for 22 perks. However, the new program doubles the amount of gift cards that can be used as perks.
How My Family is Affected
Because of the way we budget, spending this month’s income next month, it was relatively easy for us to hit $5,000 in our PerkStreet checking account each month and earn unlimited 2% cash back. That was sweet. Loved it.
Wait a moment while I sign onto PerkStreet and calculate how much money we earned in the last 12 months . . . .
We made $343 over the past 12 months. Thanks for your patience, it took awhile to add up those transactions.
Interestingly, we’ve received less money over the past year than we projected we would. However, this wasn’t due to PerkStreet, it was due to my wife not taking as many college classes as we thought she would. At normal spending levels, we would clear $500 annually very easily.
Unfortunately, we feel the changes to PerkStreet will cause us to earn less. A little more on that in a bit.
Should we keep $5,000 in our PerkStreet checking?
Looking at the new terms, I knew I had to run the math on whether it would be worth it to keep $5,000 in our checking after the changes took place. We did keep about $3,000 extra in there to make sure we were consistently over $5,000.
Using my nerdy budgeting records, I found that in the past year we spent:
- $1,445.97 at offline Walmart stores
- $849.92 at offline Target stores
- $0.00 at offline Apple stores
- $0.00 at offline Best Buy stores
That means we spent $2,295.89 over the past year at the stores where the new program would offer an extra 1% cash back if we keep $5,000 in our checking. 1% of $2,295.89 is approximately $23 in extra perks.
Now, if instead of keeping that extra $3,000 in in our PerkStreet checking to hit the $5,000 mark we funded our ING Direct Orange Savings account, we would make $24 per year at 0.8% interest.
Oh PerkStreet, ING Direct wins this battle by a dollar! But a dollar is a dollar . . . .
So we’ve decided to forget maintaining a $5,000 balance. I suspect that there will be times we will naturally be over that $5,000 threshold, but we’ll consider that icing on the cake.
How will we be affected overall?
I’m not exactly sure. But I do know the following:
- We will be making less money than before. It’s simple: previously we made 2% on all our debit card transactions because we had a balance above $5,000. Now we will not.
- We will make adjustments to spend more money online at the stores specified above instead of physical locations. This will help offset our losses, but not by much as we are limited by the convenience of physical locations and the $2,500 spending limit when trying to get 2% cash back.
- We will pay more attention to PowerPerks to help offset losses.
Admittedly, this is going to take more work on our part to try and keep our earnings up.
While the changes are negative for my family, I do recognize that we’re still going to earn a lot of cash back under the new program. Just because we’re earning less, doesn’t mean that PerkStreet doesn’t rock anymore. PerkStreet does rock.
Let’s pretend for a moment that PerkStreet only offered 1% cash back on debit card purchases, period. That alone is amazing. Can you show me one other debit card that offers 1% unlimited cash back on all non-PIN purchases? Good luck. I don’t think you’ll find one. But if you do, I’ll stand corrected by your comments below.
My wife and I had credit cards in the past, but we’ll never go back. Yes, you can earn more cash back with some credit cards in certain categories, but for us that just presents an opportunity for us to go back into debt. No thanks.
Some of you out there pay your credit cards on time every month and never were late and never racked up fees. Good for you! We just choose to not own those pieces of plastic. If we can’t pay for something with money we’ve already earned, we don’t buy it – even with borrowed money.
How the Majority of Customers are Affected
PerkStreet has stated that over 90% of their customers aren’t earning 2% cash back on their purchases because they don’t have $5,000 in their checking accounts. That means that over 90% of PerkStreet’s customer base was earning half of what I was earning.
With the new changes, over 90% of their customers will have the opportunity to make 2% cash back by shopping at some very popular online stores. This is a huge improvement for them.
If I was one of the majority, I would be jumping for joy at PerkStreet’s announcement. In fact, even though I’m negatively impacted by PerkStreet’s new changes, I respect them for bringing 2% cash back within the reach of 90% of their customers. Good for you PerkStreet!
The only negative impact for these customers that I can see is that PerkStreet has removed a strong incentive for saving money – the hope of reaching 2% cash back on all purchases. They’ve left a few incentives to save, but I believe many people will lose motivation to push their balance that high.
PerkStreet is a business. Businesses have to make difficult decisions. I’m very confident that PerkStreet weighed a barrel full of options, and the decision wasn’t taken lightly.
Some are calling these changes a “bait and switch” operation, but I’m too familiar with the people of PerkStreet to believe that to be the truth. PerkStreet started with what they believed to be a sustainable rewards program, found out that nothing is sustainable and change is inevitable, and made a move that benefits the majority of its customers.
To sum it all up:
- These changes are good for people who had less than $5,000 in their checking account.
- These changes are bad for people who maintained at least $5,000 in their checking account.
- These changes are good for PerkStreet so that they can maintain the profitability and sustainability of their financial institution.
I’m going to keep my account with PerkStreet. I’m even going to continue recommending them to others. The simple truth is that PerkStreet still saves people lots of money – especially people who don’t want to sign up for credit cards.
The “Perk” remains in PerkStreet. The day I don’t feel they are worthy of their name, I’ll let you know. As of now, their debit card stands out handsomely from the rest.
Excited? Disappointed? Leave a comment about the changes to the PerkStreet program below. I ask everyone, yes YOU, to leave a comment. Let’s get a good sample of PerkStreet customers commenting, and I promise not to delete your comment if you keep it clean and thoughtful. Looking forward to hearing from you!
Perhaps you’re thinking about joining PerkStreet and want a more thorough review. Read our full review on The Christian Dollar by clicking here.