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 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 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.
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.