UPDATE 10/21/2015: This promotion is available now through November 15, 2015 and it's been increased to $300. Please refer to this Forum posting for more detail.
For some reason Discover Bank seems to be taking forever to launch its new checking account, called Discover Cashback Checking. It’s now available, but it’s still not available to everyone. It’s only being advertised to current Discover credit card and deposit customers. Discover first started to hint about a checking account about four years ago, and it began mentioning the account in early 2013. According to a Discover Bank CSR, they’re planning to launch it "pretty soon" to the broad market.
If you’re an existing Discover Bank customer, there’s now an extra incentive to open the checking account. Discover is offering a $50 bonus. The account must be opened by 3/31/2015, and it’s limited to one bonus per customer. The bonus and checking account details are listed online at DiscoverBank.com/5FREEDEC. Below is the offer’s small print:
Offer is available only to current Discover credit card members or deposit customers, excluding current or previous Cashback Checking customers. Account is subject to approval and must be opened between 12/27/14-3/31/15. Limit 1 per customer and 1 per account. Bonus will be issued by 4/30/15 as a credit to your Cashback Checking account, which must be open when issued. Bonus is considered interest and will be reported on IRS Form 1099-INT. Offer may be modified or withdrawn without notice.
The bonus isn’t much, but it appears to be an easy $50 with no required direct deposit and no worries about monthly maintenance fees. It only requires a minimum initial deposit of $25. Also, according to the CSR, there’s no hard credit inquiry. In the application, they just do a soft pull.
The new checking account is a free checking account with no monthly service fees or minimum balance requirements. Instead of paying interest, it offers cashback rewards. You can earn 10 cents bonus on up to 100 transactions per month for:
- 10¢ debit card purchase
- 10¢ online bill pay
- 10¢ check written
Checking Cashback Bonus can be redeemed as cash to your Discover Cashback Checking account or transferred to a Discover Credit Card Cashback Bonus account.
Some other noteworthy features of the Discover Cashback Checking account include:
- Free cash withdrawals at over 60,000 Allpoint® and MoneyPass® ATMs
- Free standard paper checks
- Free ACH bank-to-bank transfers
- Deposit a check with Discover's Mobile Check Deposit using your mobile device
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).
In terms of features it’s comparable to the checking accounts at Ally Bank and at Capital One 360 (formerly ING DIRECT). However, both of those two checking accounts pay interest.
If you have Discover Bank’s savings account or CDs, you may want to consider this free checking account. Check writing can be useful for moving money, and unlike Discover Bank’s 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 $10 monthly service fee.
Discover Bank's Savings and CD Accounts
Discover Bank does offer a free savings account and competitive CD rates. The savings account rate (0.90% as of 1/16/2015) is a little low, but its online banking features are strong. You can easily set up and initiate online ACH transfers. According to the CSR, the transfer amounts are limited to $250,000 per 30 day rolling period (both incoming and outgoing).
Discover Bank Overview
Discover Bank is one of the largest internet banks. It has over $79 billion in assets and over $45 billion in deposits. Its overall health grade at DepositAccounts.com is an "A+" with a Texas ratio of 5.72% (excellent) based on September 30, 2014 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).