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Discover Bank's Cashback Checking Account To Be Launched Soon

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Discover Bank

For the last two years Discover Bank has been hinting about a checking account. It looks like the checking account will finally be launched this year. Some Discover Card customers received a preview of the checking account when they logged into their accounts. It turned out that Discover jumped the gun. The announcement was premature. The checking account is not currently available and will not be available for another few months. However, the announcement did provide details on many features of this new checking account. Thanks to DA member RJM who posted on this news in the forum, and thanks to RJM and DA reader pearlbrown who called Discover for additional details.

The new checking account will be called Discover Cashback Checking. It's a free checking account with no monthly service fees or minimum balance requirements. Instead of paying interest, it will offer cashback rewards. Below is an excerpt of the major features as listed in Discover's announcement:

You’re already enjoying Cashback Bonus with your Discover card–now you can earn even more.

It’s easy – with Discover Cashback Checking you’ll earn:

  • 10¢ debit card purchase
  • 10¢ online bill pay
  • 10¢ check written

Cashback Bonus

  • Cashback Checking is an exclusive online offer available to Discover cardmembers
  • Cashback Bonus is added monthly to your Discover Cashback Bonus Balance
  • Same great redemption options–gift cards, merchandise, cash and more

Free Features

  • Free cash withdrawals at over 23,000 ATMs nationwide
  • Free standard checks
  • Deposit checks from a mobile device
  • Pay bills anytime on the go

RJM reported being told that the cashback will be separate from those earned with the credit card so you'll need to earn $25 cashback from your checking account to redeem the amount. This will require 250 of those transactions to accumulate $25.

My Take

Even though it won't pay interest, this will be a nice addition to Discover Bank's deposit products. If you have Discover Bank's savings account or CDs, you may want to consider this free checking account when it becomes available. Check writing can be useful for moving money, and unlike the money market account, you don't have to worry about being limited to six withdrawals per month. Another downside with the money market account is that it requires a minimum average daily balance of $2,500 to avoid a monthly service fee.

The checking's cashback feature isn't that great of a deal in my opinion. For debit card rewards, I prefer a high-yield reward checking account (Bank of Internet USA's Rewards Checking account is one example from an internet bank).

Other Discover News

In credit cards, Discover recently made news with the launch of the Discover "it" card. I did a quick review of the credit card in this forum thread.

Discover Bank's Savings, Money Market and CD Accounts

Discover Bank does offer a free savings account and competitive CD rates. The savings account rate (0.80% as of 1/22/2013) is a little low, but its online banking features are strong. You can easily set up and initiate online ACH transfers. Transfer amounts are limited to $100,000 per 30 day rolling period ($100K for incoming and $100K for outgoing).

Discover Bank Overview

Discover Bank is one of the largest internet banks. It has over $73 billion in assets and over $42 billion in deposits. Its overall health score at DepositAccounts.com is 5 stars (out of 5) with a Texas ratio of 6.66% (excellent) based on September 2012 data. Please refer to our financial overview of Discover Bank for more details. The bank has been a FDIC member since 1934 (FDIC Certificate # 5649).

Other Internet Checking Accounts

If you're looking for an internet checking account that's available now, refer to our checking account table to find the ones with the highest rates. We have a different table for reward checking accounts.

Last year I did a comparison between the checking accounts at Ally and ING DIRECT.


  Tags: Discover Bank, checking account

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Comments
6 Comments.
Comment #1 by stormdog123 posted on
stormdog123
10 cents for an online bill pay. I can image people paying their bills in 10 cents increments.

10
Comment #2 by irene1 (anonymous) posted on
irene1
capital one sharebuilder just out with a $500 bonus for the new year. came in email. 

1
Comment #3 by RJM (anonymous) posted on
RJM
The 10 cent per billpay is limited to one 10 cent cashback per payee per month. So no benefit for paying the same bill via multiple billpays.

 

 

2
Comment #4 by Anonymous posted on
Anonymous
If 10c per bill pay per payee per month is true in the fine print, then how about the number of checks you can write per month and/or payee? IMHO, the money market is still better with current 0.80%; and ING electric checking still seems better, and Ally checking still best with interest rate and ATM fee refunds.

1
Comment #5 by RJM posted on
RJM
Ive had the discover checking open for a few months now.

The cashback, I think, IS added to your discovercard cashback. But, I cant find anywhere that it mentions it. I think I must have had 8 transactions by first month as I noticed 80 cents added to what I already had but there was no notification or anything and no mention on the statement. And it might be delayed a month or two.

A number of people reported getting notices of a $50 bonus for opening the account. (Targeted I guess)

I did not get an email or snail mail offer. Nor did I get a $50 bonus.

I did happen to ask how they would protect themselves against those who will try to abuse the system and they said they would send a warning letter and if that didnt work, potentially close the account.

The per payee per month language is no longer there like it was before the account launched. I dont abuse it but I have made a couple of $1.10 dollar store purchases and a $1.42 debit card transaction at Aldi for a loaf of Oat Bread. Mostly, I just use the card for my Aldi purchases.

Discover has an unexplained $25 minimum deposit amount if you want Discover to pull it from another account.

 

Since the account does not pay interest, I dont keep a lot in there and try to replace it on an as spent basis and its usually less than $25. So I use Ally to push it to Discover.

I think I asked about their overdraft policy when using a debit card and she said it would just reject the transaction if you tried to charge more than was in your account but no NSF fees. (I didnt ask about NSF fees for a check because I only write 2-3 checks a year)

1
Comment #7 by RJM posted on
RJM
By the way, I opened my account before there was a $50 targeted bonus for opening an account. I sent emails asking where by $50 was. They delayed it several times but I finally got the $50 bonus from when I opened my account in early July.

1