While 2011 has been an unprecedented year for credit card sign-up bonuses, the exact opposite has been happening with debit cards. In July we saw Continental discontinue all mileage earning on their Chase debit cards and most other mileage debit card programs are rumored to be ending soon. New financial regulations make debit card purchases not lucrative enough for the banks to make it worthwhile to give out points.
So what about all the people who can’t get in on the lucrative credit card deals but still want to maximize their spend?
Most non-points debit cards give lousy rewards that usually amount to .5 cents to 1 cent in value back (usually via gift cards) for non-pin purchases. Red Lobster gift card anyone? However, I recently stumbled across the PerkStreet FinancialSM Debit MasterCard®, which gives a whopping 2% Cash Back when you have a balance of $5,000 or more in your free checking account, or 1% cashback if you have less than $5,000. Cash back is in the form of a MasterCard gift card, which isn’t exactly cash, is pretty close and much better than a specific airline/restaurant/store gift card.
2% back is pretty incredible - even for a credit card. There used to be a Charles Schwab 2% cash back credit card that was hugely popular – even within the hardcore frequent flyer community, but it was eventually discontinued.
Beyond the 2% cash back, there is no annual fee, no monthly fees, a huge network of free ATMs and all money held is insured with FDIC (up to $250,000). They even have rotating categories/stores that offer 5% cash back, for example from August 1 to August 31, you’ll earn 5% cash back on all non-PIN purchases at Textbooks.comSM, Chegg.com®, Half.com®, and the Apple® store (online and in-store; does not apply to iTunes purchases), as well as at Amusement Parks (purchases with MCC code 7996).
This card could be great for a college bound child who may not have the credit for a good rewards card (nor want to pay an annual fee), yet wants to get cash back. I can also see this being good for people with credit issues, because there is no hard inquiry on your credit when you open up a checking account/debit card. So while you get your credit rehabilitated, you might as well be earning valuable cash back.
Honestly, I can see people with excellent credit and even business owners getting this card and maxing out on the cash back. There are no limits on the amount of cash back you can earn, so if you’ve got a spend of $20,000 monthly (not uncommon for a business), you’d get you $4,800 cash back every year as long as your balance is over $5,000 a month. Not an insignificant amount of money!
Overall, I think this is a great option for people from all sides of the financial spectrum. While I found out about PerkStreet through my affiliate network, I did some research and they have a pretty impressive track record and seem to be gaining market share in the debit card space, while most other companies are losing. Check out articles like this NY Times piece or this Boston Globe interview with PerkStreet CEO Dan O’Malley.
Even if you can’t afford the $5,000 minimum required to get 2% cash back, getting 1% cash back is much more valuable than getting 1% (or less) back in travel rewards/gift cards like most other debit card reward programs. Even the American Airlines Bank Direct account requires huge capital investments to earn any miles after the initial sign-up bonus.