Everyone knows how the banks keep forcing us to sign up for their overdraft protection service; we always thought that it was just another one of their ways to sell their banking services to us that we did never need. Now here we are, watching credit unions putting out hard-sell advertising trying to get us to sign up as well. For a modest fee of $29 for every overdrawn transaction, they make sure that your debit card never gets declined. Take the Truliant Credit Union of North Carolina. At first, they tried the gentle approach; their online advertisements sent you to a page that gave you information about overdraft protection, an option where you could get a credit line for much less money. Now their new ads practically pick you up and point you to the dotted line, to get you to accept their expensive service. So how come everyone’s all anxious to sign us up for these banking services now?

All of this rises from the new rules that come into effect starting July. It used to be that banks and other savings organizations could sneak up on you and sign you up for banking services that earned them a fat profit without your knowledge. With the new financial reform, this is no longer going to be possible. Expensive optional services like these are to be the opt-in kind from now on.  They must be really hurting with the new laws; it must have been a big part of their income, signing us up for unnecessary overdraft services. And the way Truliant is acting now, it’s clear that the credit unions don’t absolutely have to be better than the banks all the time.

Banking services like overdraft protection aren’t necessary for most people. Most people have never had an overdraft in their lives. There’s a real need to hard-sell these – no one would buy them otherwise. You know that a bank or credit union is up to no good when it stops pushing the cheap credit line option, and places overdraft protection front and center.

Actually, the very term “protection” when used to describe an overdraft service is kind of a misnomer. If you try to use your debit card, you find that there is no money in it, there’s nothing that actually hurts you. You don’t get fined, you don’t get charged anything. There is no actual protection against anything that they’re offering you. If you ask any expert in the matter, he’ll tell you that the whole overdraft protection deal is a real scam. If you overdraw by as little as two dollars, you pay them $29 to cover it. Now if that isn’t a bad deal, what is?

Here’s a new kind of bank. PerkStreet Financial, the bank, has a new plan. They are announcing a 2% rebate on every dollar you spend using your Perk debit card, out of your checking account with them. And that’s not all; if you have $5000 at the opening of the business day, you’ll get a Visa gift card, or gift vouchers from major retailers. If you have anything less than $5000, you’ll get 1% of the cash back as reward for anything you spent during the day. It simply seems like a pretty good incentive for opening a checking account with PerkStreet Financial.

Is this is really a reliable bank though? it only began to accept retail consumers opening a checking account a year ago. It works now in association with Bancorp to bring you its retail banking services. PerkStreet rose up and functions today on venture capital.

This wouldn’t be the first time that a bank has tried to get walk-in customers try opening a checking account with them, with the 2% cashback offer. They’ve tried, and they’ve failed; debit card issuers have found that that 2% rate is quite unsustainable. Charles Schwab did it two years ago for instance; but they haven’t been able to keep it up, and they’ve started turning away new customers coming in opening a checking account. They hoped to make enough to offset the expense, with interest charges; they found out that it didn’t really go that way.

Now how exactly does PerkStreet Financial hope to sustain its plan? A debit card sucks money directly out of your checking account; there is no interest that the bank could possibly make. The answer is, that there are a few areas of revenue; to begin with, retailers that accept PerkStreet Financial’s debit cards have to pay the bank a fee. For every hundred dollars you spend for instance, they have to pay the bank about a dollar. And then of course, there is the $5000 minimum balance that earns them something in interest. There will be many people who will keep it above the bare minimum too, and that would be a plus. They can invest your minimum balance, or at least a part of it, in safe places that earn interest. What does Bancorp gain in of all of this you ask? It lets PerkStreet Financial take care of all the shoe leather. Perk excepts the headache of creating a branch network, bringing in people opening a checking account, administering everything and so on. And Bancorp takes care of the backend.

 The normal kind of rewards programs the banks have, pay far less than even 1%. Perk’s 2% is generous enough that it could actually get people to switch to opening a checking account with Perk. Just imagine – if you spend $1000 every month on your PerkStreet’s debit card, you’ll end up making about $200 in annual rewards. And that doesn’t even include the bonuses that the bank will offer from time to time. And if you have at least one transaction a month, there are no administration fees you pay on the account.

Anyone opening a checking account with Perk Street will find that there are no actual Perk ATM machines. The bank though does have agreements in place with other ATM networks to allow you free access though. Perk is rather new at all of this, and there’s no telling how sound its plans are. Is it possible that they plan to bring you in, and then cut you off from your rewards? It’s been done before; but Perk says that they will never pull such a stunt.