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Cash back credit cards and rewards credit cards are a great way to get a little ‘free’ money, when cashing in points or cash back earnings for a statement credit or a check in the mail.
However, let’s face it, cash back credit cards and other rewards cards have drawbacks. Rewards credit cards tend to feature higher-than-average credit card interest rates (which quickly suck up rewards earnings if you leave a balance on the card); and many rewards cards also charge an annual fee. In addition, as with all credit cards, it’s tempting to spend more money than you have.
Well, rewards credit cards junkies, listen up: Now you can have your cake and eat it too. A new debit card rewards program from Perk Street Financial lets debit cardholders earn a sweet 1 percent cash back on all purchases made without a PIN. The card currently offers a sign-up incentive, which gives new cardholders 2 percent cash back earnings for the first six months. If they prefer, cardholders can also redeem earnings for a variety of gift cards from popular merchants including iTunes, Amazon, Starbucks and more.
Earning cash back rewards is easy: simply swipe the debit card and choose to pay without a PIN number. By choosing to pay PIN-free, the transaction runs like that of a credit card. The money still comes directly out of your account (minimizing the danger of overspending), but the purchase is wired through the Visa payment processing network. Banks pay lower transaction fees for PIN-free transactions, so Perk Street Financial is simply passing on some of those savings to cardholders.
While Perk Street’s debit card rewards program is not the only of its kind, it’s the first to offer rewards on par with those of cash back credit cards. Chase’s Leisure Rewards debit card, for example, gives users 4 points per dollar spent, however, the points are worth less. Chase Leisure cardholders need 10,000 points (or $2,500 in spending) to get $20 in cash back, and they pay a $25 annual fee. Perk Street debit cardholders get $25 cash back on $2,500 in spending (or $50 during the first six months), without an annual fee.
PerkStreet’s rewards debit cards come with all the features of traditional checking, and include online bill pay and free checkbooks. There is a $25 minimum balance for opening an account, but no restrictions after that. Deposits are FDIC insured, up to $250,000, and like other debit cards, the Perk Street rewards debit card is protected from fraud by Visa’s Zero Liability policy. The Perk Street debit card does come with an inactivity fee of $4.50 for every month the card is not used, so consumers who wouldn’t regularly use the card may wish to pass.
In addition, debit cardholders need to be aware that debit cards don’t come with quite the same fraud protections as credit cards. For more information about the benefits of debit cards vs. credit cards, see this article on debit card fraud protections.
