Discover Just Eliminated All Banking Fees. Here's Why That's a Big Deal

Discover just announced that it is eliminating all fees on its checking and savings accounts, as well as its CDs and money market accounts. Discover's customers will no longer pay maintenance fees, insufficient-funds charges, stop-payment fees, and more. Even checks are free.

Discover will charge no deposit account fees whatsoever

Discover is eliminating fees on all of its deposit accounts, including its popular Discover® Online Savings product. This means there will be no maintenance fee associated with any of the accounts, nor will there be any charges for overdrafts, excessive withdrawals, or stop-payment requests.

Just for a bit of context, the average checking account in the U.S. comes with a maintenance fee of about $13.50. And while there is usually some way to eliminate the monthly fee -- such as by maintaining a certain minimum balance, directly depositing a certain amount of money, or using their debit card for a certain number of purchases -- many people simply can't make it happen month after month.

While monthly fees are still very much alive among major banks, it's become quite common for online-only banks to offer no maintenance fees on their online checking accounts. That said, the elimination of all deposit account fees is a rarity. For starters, the elimination of fees for non-sufficient funds is welcome news. The average NSF fee in the U.S. for branch-based checking accounts is well over $30 (Discover's fee was previously $30), so this could be a money-saver for many people.

Our Picks for the Best High-Yield Savings Accounts of 2024

Capital One 360 Performance Savings APY 4.10% Rate info See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Sept. 27, 2024. Rates are subject to change at any time before or after account opening. Min. to earn $0 Open Account for Capital One 360 Performance Savings On Capital One's Secure Website. Member FDIC.	APY 4.10% Rate info See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Sept. 27, 2024. Rates are subject to change at any time before or after account opening.	Min. to earn $0
American Express® High Yield Savings APY 4.10% Rate info 4.10% annual percentage yield as of October 8, 2024 Min. to earn $0 Open Account for American Express® High Yield Savings On American Express's Secure Website. Member FDIC.	APY 4.10% Rate info 4.10% annual percentage yield as of October 8, 2024	Min. to earn $0
Discover® Online Savings APY 4.10% Min. to earn $0 Open Account for Discover® Online Savings On Discover Bank's Secure Website. Member FDIC.	APY 4.10%	Min. to earn $0

In addition, the elimination of an excess withdrawal fee on savings accounts is a unique approach. The industry standard is to limit savings account withdrawals to six per month, with a fee of as much as $15 per occurrence for customers who exceed the limit. To be clear, the limit of six is still there, and Discover states that "if you go over these limitations on more than an occasional basis, your account may be closed." It just won't cost you anything if you exceed it.

Discover also eliminated several other costs and fees. It now offers:

• Free orders of standard checks with its checking account.
• Free ATM withdrawals at more than 60,000 ATMs in the U.S.
• Free official bank checks, plus free expedited delivery.
• Free online bill pay.
• No minimum balance fees.
• Free stop-payment orders -- this can be more than $30 at other banks, and Discover used to charge $15.

The war on fees rages on

Discover joins several other popular online savings, checking, and CD accounts, as there is a clear trend in the financial industry to eliminate fees and increase transparency (although Discover has taken it a bit further than most). While there's no such thing as a perfect bank account for everyone, there's no good reason I can think of to choose an account that will cost you hundreds of dollars in fees every year, especially when there are no-fee alternatives from reputable financial institutions.