by Matt Frankel, CFP | June 18, 2019
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 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.
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:
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.
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