PerkStreet Financial Will Cease Operations, Customers Lose Rewards Balances

perkstreet-financial

by on August 12, 2013

PerkStreet Financial customers were surprised with a major change to their banking situation this morning. The company announced the cancellation of their business operations, effective September 26, 2013.  Accordingly, they will no longer be accepting applications for new accounts.

A letter of further explanation on their website pinpoints the problem:

Over the last 6 months we have been pursuing additional investment to grow our business to the point it could be self-sustaining. Unfortunately, we were unable to secure more funding and now must begin the process of closing the company.

Next steps for customers

No customers will see their balances lost in the process of this change, however there are some significant inconveniences they will face. Primarily, customers with existing rewards balances (earned through debit card use) will lose these “perks” as of today, August 12, 2013.  Any redemption requests prior to today will still be honored.

Customers who applied for a PerkStreet account prior to March 6, 2013 will be able to continue using their account as they have in the past, with the same debit card and online banking site. Accounts will continue to be serviced by partnering institution The Bancorp Bank.

More recent customers have been asked to move their money out of their account as soon as possible. ACH transfers into PerkStreet, check deposits and bill pay will not be accepted or functional effective September 11, 2013 and debit cards will cease to work on September 23. This means customers have just around a month to get their financial affairs in order with regards to direct deposits, opening a new checking account, and other important concerns.

A sign of more to come?

Some consumers are taking this as a bad sign of more impending turbulence for online banks. After ING Direct became Capital One 360 earlier this year, die hard fans of the Orange online accounts announced loud and clear that they were not happy about the change. PerkStreet customers are likely to do the same, especially since many have lost the valuable rewards they were promised. Many are already asking, “Does PerkStreet’s demise tarnished online banking as a business model?”

Let us know how you’ve been affected in the comments below.

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  • jackee

    It’s complete and utter bull that this supposedly utopian system of banks, particularly debits cards literally wiped out people’s perk credits. The only reason I was using this card was to GET those credits. It’s the only thing they had to offer. Now, I have to find another system to bank through(after leaving a good enough bank in May for Perkstreet) and those promised perks are in the toilet. They are just as slimy as any other business. And the “get your money out of our bank now” letter did not please me either(esp since supposedly we have until the 28th of sept). Dishonorable, misleading, cheating a holes.

  • Wendy Sisson Anderson

    I began using Perkstreet about two years ago strictly because of the perks. I used the perks as a Christmas fund. I’m upset that Perkstreet doesn’t have the money to pay off those perks. It seems pretty basic that they should have been setting aside the money to cover the accrued perks from the fees that are paid to them by retailers whenever someone used their Perkstreet debit card. This wasn’t money that Perkstreet had to come up with on their own. They were receiving the money every time a card was used. They just chose to spend it instead of set it aside. Very upsetting and unfortunate. I’ve already transferred my money and will be closing my account.

  • Dave Moriarty

    I used that card exclusively and had an accumulated balance of over $350 in perks ready to claim for gift cards! This is BS! I hope there is a class action suit filed in behalf of the customers to get us at least some of the “Perks” we worked hard to achieve!

  • Taylor Majerus

    Boy am I glad I cashed out my perks for a gift card last week!

    • Bernie W.

      Same here!

  • sillyeme

    We had over $840.00 in our account that we had been saving since we opened it. Even if they gave us half I would feel a little better. I know they covered themselves by saying they could cancel at any time, but this just seems wrong.

  • Steven

    This explains a lot… I was shocked and dismayed to see the announcement today. Perkstreet had in one fell swoop snatched up my Perks of just shy of $100 and characterized it as “sad”. Even as they did not directly share with me any insights of pending doom, they continued to dangle carrots to get me so spend more to acquire perks that they apparently had no intention of honoring. Then threw up a shield that they bolded in their announcement that it was in accordance with the account agreement. I would say that their interpretation of the account agreement is very liberal and obviously self-serving. It is one thing to end the program, it is quite another to claim all the balances for themselves. However, looking over the last several months with Perkstreet, I have dealt with a few integrity issues (to put it politely) with them. I have actually asked myself several times why Dave Ramsey continues to endorse them or for that matter why he ever did endorse them. They are a bank, long and short, a bank. If you did not believe that before, they definitely proved that today. Quite a fee that they assessed for themselves for the one simple act of being their trusting customer. As Dave Ramsey always says, when you play with snakes you are eventually going to get bitten.

  • bankalchemist

    It would appear that most users were content with the value proposition offered by PerkStreet. But its accounting like accrued airline miles on your reward/loyalty programs. Its a debt that is carried on the balance sheet. They were relying on the exchange fees that could be earned for providing the service which was a private label via participating banks. This is a difficult value proposition to sustain over time as a true Bank can offer other services with the same card or key to the system that a non-bank provider can not. They must negotiate each additional service with the Bank they are using to deliver the service. Not much different from BankSimple whose PR was some of the best ever advance awareness PR ever. Soon they learned you can not use the word BANK in your name if you are not a true Bank licensed by the regulatory agencies. There are others out there now believing they to can storm the world wide Financial Bastille with their offering to change your financial behavioral behavior. Simple right?