UPDATE: It is with a heavy heart that I have to update this post/release. PerkStreet announced that they will no longer be in operation at the end of September 2013.
PerkStreet is a relatively new financial product that’s doing everything right: It’s a checking account with a debit card that allows you to earn rewards on things you already and the same zero-liability protection major credit cards have. I asked the founder and CEO of PerkStreet Financial to share all the great things that are happening at PerkStreet.com.
Interview with CEO Dan O’Malley
SOS: Who is Dan O’Malley?
Mr. O’Malley: I am a long-time financial services executive and an entrepreneur as well as a father and a husband. What I really care about as a person is being able to improve lives. I think at the end of the day it’s what we all care about and that’s why I started PerkStreet with the rest of our team. There is such an incredible opportunity right now in banking to change how people relate to their money. We’re at a fulcrum point right now and we got started with PerkStreet because we thought we could change the industry, change lives, and build a great company at the same time and it’s been a lot of fun.
SOS: How long has PerkStreet been around?
Mr. O’Malley: We founded the company in 2008 and formally launched the business in 2009-2010. For the past 2 years we’ve been growing very quickly.
SOS: What is PerkStreet and what makes it different from other banks?
Mr. O’Malley: Our checking accounts are what we call “Personal Profit Engines”. We let our customers earn an incredible amount of cash back by banking the way they were already going to bank and buying what they were already going to buy. How it works is you earn cash back for buying things with our debit card, for setting savings goals, for automating finances, for doing things that are smart. You don’t earn cash back for things that will get you into trouble and into debt which is typically what a bank wants you to do. That’s what makes us different. We let Americans earn cash and improve their financial lives without ever having to worry about getting in to financial trouble. It’s liberating, it’s exciting, and it’s exactly what the industry needs right now.
SOS: PerkStreet is like using your local bank but has ATMs all over the nation instead of physical banks, is that correct?
Mr. O’Malley: That’s right. How we are able to give people such an incredible amount of cash back is by not building branches. Think about it, when was the last time you had to physically walk into a branch – there is no need for it any more. What we do is very similar to how Amazon has changed the way people buy books and music among other things. When you get rid of the branches and locations you can give people an incredible deal. So we have built the best direct checking account in the world.
SOS: How does PerkStreet make money?
Mr. O’Malley: The ways we make money are the same ways your typical bank is going to make money. Whenever you use our debit card to make a transaction, we make money from that. We get paid a portion of the transaction from the merchant for facilitating the payment. We also make money off holding your money for you and selling other services like wire transfers or selling books of checks and things like that.
SOS: Can you share a success story of how PerkStreet has helped one of your customers?
Mr. O’Malley: Yes. We ran a promotion once to have people tell us how PerkStreet has made a difference in their lives. The videos and pictures and emails that people sent us within the first 10 hours of launching it were amazing. One is the story of a family that had a tremendous amount of credit card debt. They were really struggling to get out from underneath it and they were trying to work through how they were going to build some momentum behind paying it off. What we were able to help them do is start the momentum growing by giving cash back. I forget the exact amount but it was over $500 in their first year with us and that was the catalyst they needed to end up paying off more than $10,000 worth of debt. That’s a huge amount of money and you need that spark some times. We can create that spark for people without really any effort – they just bought what they were already going to buy and we gave them cash for it.
SOS: I would think that buy living without credit they had a greater amount of control on our spending.
Mr. O’Malley: That is such a fundamental point about what we do. Prior to founding PerkStreet I was at Capitol One for a number of years and I can tell you that I saw first-hand what credit cards do to people’s financial lives. You always thing you are going to get out alive when you use a credit card and, frankly, no one ever does. You always spend more than you think you are going to and most people, 60% of American households, are going to find themselves in credit card debt at some point during the course of a year. You just shouldn’t use the things, I don’t care how good the rewards are. What we do is let people get the same excitement of earning but with a product that is fundamentally good for them – the checking account. And we hear that from our customers, that one of the best things about PerkStreet is that they to get excited and win with the rewards we give them but we do it in a way that is liberating, above board, and straight-forward.
SOS: The customer service is incredible. I tell the story of how my PerkStreet card was compromised and PerkStreet made it incredibly easy to reverse the charges and replace the card.
Mr. O’Malley walks us through how to earn rewards with a PerkStreet account.
Listener question: Dustin Hartzler from YourWebsiteEngineer.com asks if PerkStreet has ever thought about partnering with a hotel chain or airline company to provide rewards back to their customers in the same way a Marriott rewards credit card, how every point or percentage you accrue you get free nights or a free stay, something like that. I’d be interested in seeing what the CEO of PerkStreet has to say about that.
Mr. O’Malley’s answer: We have looked at that. In fact, we have looked at a number of additional rewards programs that we are pretty excited about. Those include not just travel rewards but also rewards in partnership with certain retailers where you might get a retail-branded card that could offer you a particularly good deal on what you buy with them. That is very similar to how credit cards are sold today. What we want to do at PerkStreet is basically put credit cards out of business. We just think there is no reason to use them because you should be spending your own money. All the different types of reward programs you can get with a credit card will eventually be on PerkStreet so you can get the same benefits for spending your own money as opposed to having to spend on debt.
SOS: What can we look forward to with PerkStreet?
Mr. O’Malley: Our customers ask us pretty much everyday about our savings accounts and our mobile app. I want to let them know we hear them and we are working on that. In addition we are launching a couple other things that we are really excited about. One is we are launching a digital envelope product. If you are familiar with how cash based budgeting with envelopes works: you basically set an amount of money aside every month in different categories. What we do in an online, automated way is let you track your spending against those envelopes. Unlike using Quicken or Mint where you are really just looking at what you have spent in the past, this is a proactive, forward facing budgeting tool that help you spend what you want within your budget. We’re really excited about that because nobody has built that directly into a checking account before. Envelope products have typically existed outside of how you bank, I think putting it in the bank account will be an incredible tool to help people stay on budget and make it easy. At the end of the day, everyone thinks budgeting is really, really painful but it doesn’t have to be that way. We can make it easy, we can make it exciting because over time we are going to integrate our rewards program directly into the envelopes.
SOS: Can you tell us about StreetSense?
Mr. O’Malley: We have created a series of online personal finance coaching courses delivered to your inbox. We call them StreetSense. They are easy, they are fun, you can do them on your own time by reading and working through these emails. We are right now three courses into what we expect to be 20, 30, up to 40 courses over time that will let people improve their financial life without having to go through a lot of the heartache that you typically have to go through. In about a week-and-a-half we are going to be launching one with a face that I think millions of Americans are going to know because he’s been on TV before.
SOS: How can people find out more about PerkStreet?
Mr. O’Malley: People can go to PerkStreet.com and find out more. They can also go onto our Facebook.com/PerkStreet page and talk to our community of like-minded savers about what they think about PerkStreet and find why they switched and how much they are earning.
SOS: Mr. O’Malley, CEO and founder of PerkStreet, I really appreciate you taking the time out of your busy day to talk about PerkStreet and the wonderful things that it can do for those of us trying to live debt free in an electronic world.
Mr. O’Malley: It was my pleasure. I’m always happy to come on an tell our story about PerkStreet.
April is National Financial Literacy Month.
I’m hosting short videos from personal finance bloggers from all over the United States that will release one 2-minute video each weekday to talk about a specific topic that has to do with money. Two videos mentioned: Kids & Money by Brad Chaffee’s 5-year old son and PTMoney’s 10 quick questions about Roth IRAs
It’s coming. Stitcher is going to be everywhere, even in car stereos. If you know someone who wants to stream podcasts on their mobile devices then please have them download the free app by using this link: Stitcher.com/MoneyPlanSOS
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