This is not the first time my wife and I have dealt with our bank going out of business. Our last brick and mortar bank in California, Washington Mutual (affectionately nicknamed "WaMu") shuttered its windows during the financial crisis in 2008. It freaked us out a bit as we didn't really know what that meant for the money we had in our accounts. Would it just go away? Would we be reliving those scenes from the 30's and make a run on the bank? Would we farm the earth like the Joads?
Everything worked out, but the bank still closed and now, with Perkstreet, we are two for two. So, this is fair warning to any institution unlucky enough to service our next checking account: my wife and I are on a streak. If we apply for an account, you should probably apply for a new job.
Way Back When...
As a new customer of Perkstreets, I was a huge fan. They were like a bank from 20 years ago: everything was free. Free checking, free checks, free ATMs, and, since there was no bank to walk into, free UPS overnight delivery of checks to deposit. I loved Perkstreet. I'd actually tell friends and co-workers about our rad new bank. Plus, we'd get 2% back for all purchases...on a debit card!
As long as we kept $5,000 in the checking account, and ran our card as "credit", we get 2% cash rewards on every purchase. Our emergency fund wasn't earning much of anything in a savings account, so we were happy to park some funds in checking to get the rewards. While credit cards definitely could get us more in rotating categories, and even the Fidelity Amex card gave the same 2%, we just liked the simplicity of knowing that 2% was our floor. And since the debit card was a Mastercard, it was accepted just about everywhere, while the stray merchant here or there still refused Amex.
The main thing I miss about using the Perkstreet card for everything was the simplicity. All our purchases, from checks to account transfers, utility bills to card swipes, all were tracked in the same place. No more logging into various accounts to track spending. I could pull up one account, and track every penny. Easy peasy, lemon squeezy.
But I had a feeling Perkstreet might be in a bit of trouble last year when they abruptly ended their 2% cash back program. They tried re-branding it a bit, by giving 2% at Amazon & Target, & 5% on rotating monthly categories. But if I was going to jump through hoops, I figured we could do better on reward credit cards. So we shifted all our spending to credit cards we were churning, and just used Perkstreet as a normal old checking account to actually pay the credit card bills and write the occasional check.
The Good Times had to End Sometime...
That brings us to Monday, when Perkstreet announced that they'd be closing up shop next month. The company indicated it had been trying for months to find investment dollars, until the company could grow to be self sustaining. I suppose this sort of thing happens. Start-ups try to challenge the big players; some grow, some die. But here's the crap part (again, from Monday's email):
"Consistent with the terms of our Rewards Program Agreement, we have discontinued our perks program and cancelled all perks balances as of today, August 12, 2013. Redemptions requested prior to August 12, 2013 will processed in accordance with your request."So unless you were clairvoyant and knew that Perkstreet was going to go out of business, you lost any rewards you had been building up the moment the company announced its closure. Luckily, this won't impact the Done by Forty household as we don't use the Perkstreet card any longer. (I think we had $8 dollars in rewards left.) But as someone who used to funnel a lot of spending through the accounts, I can say that it's likely that a lot of their customers weren't building up a small balance and then cashing it in asap.
Instead of applying their cash back rewards to your checking account (which would be entirely too easy) Perkstreet sent out little prepaid Mastercards. The smallest denomination was $20 or so. But if you're driving all your spending to these cards, it's likely that you'll get them pretty regularly. It's kind of a pain to have a lot of small-dollar prepaid cards in your wallet, one with $5.63 left, one with $8.57 left, etc. Better to build up a bit of a balance over time and just have, say, one $100 card sent out to you, right? At least that's what I tried to do when I was a customer.
But anyone who had a rewards balance left with Perkstreet has lost it, at this point. The company is claiming they simply don't have the funds to pay the rewards. From the company website's FAQ section:
"We wish there was another option but, unfortunately, we didn’t have any other choice. We worked to find funding sources or potential acquirers for the business, but business conditions required that we end the program. The terms and conditions of the program allow for the program to be ended at any time."Thanks a lot, buddy. I'd like to think that Perkstreet saw the writing on the wall early enough to give their customers some notice...any notice. And I'd also like to think that leadership at a company would think a bit harder about the legacy left, even when things go to the crapper. But it's all done now.
It seems we can just let our account transfer to a partner bank (The Bankcorp Bank) and, apparently, our checks & even the debit card will still work. But I'd just as soon find another place to park our money, just on principle. Plus, my wife will be abroad for a long while and we don't want to learn that she can't take money out of an ATM past September 26th.
Any suggestions? Do you have an online bank that you would recommend? Ought we consider a credit union? Or should we leave everything well enough alone and keep our account where it is?
As always, thank you for reading. (And for letting me rant a bit!)
*Photo is from timetrax23 at Flickr Creative Commons.