Digital only bank accounts are plentiful and new providers are entering the marketplace all the time. Just last week there were headlines announcing the UK’s Monzo bank and Germany’s N26 are getting closer to launching their banking solutions in the U.S.
Perhaps with that in mind, Discover announced that it is eliminating fees on savings and CD accounts plus their digital checking account. That includes eliminating the insufficient funds fees:
Discover says it will no longer charge fees for insufficient funds, excessive withdrawals, falling below minimum balances and stop-payment requests on any of its checking, savings, money market and CD accounts.
“Removing all deposit account fees was an easy decision for us based on our commitment to offer the most rewarding banking products in the industry,” Arijit Roy, vice president of deposits at Discover, said in a statement.
This latest announcement builds on Discover’s already low-fee offerings. For example, Discover already offered checking customers an account that does not charge a monthly maintenance fee and offers 1% cash-back rewards on up to $3,000 in debit card purchases. Plus, Discover customers have access to 60,000 no-fee ATMs in the U.S.
Prior to Monday’s announcement, Discover charged customers a $30 insufficient fund fee when they overdrew their checking or savings account. But Discover capped the number of fees assessed to just 1 per day, as opposed to other big banks who levy 3 to 4 of these per day.)
This may be a good move not just to stave off competitors, but also a good political move. Legislation to curb account fees pop up from time to time, particularly around overdraft an insufficient funds fees:
Roughly 1,200 customers have lodged complaints about overdraft policies to the Consumer Financial Protection Bureau’s database so far this year.
Rep. Carolyn Bosher Maloney (D-N.Y.) and other Democrats want to change that. In 2017, Maloney introduced the Overdraft Protection Act. The legislation would require overdraft fees to be “reasonable and proportional,” and would limit the number of overdrafts to once per month and a total of six on an annual basis.
The congresswoman said last month that she planned to reintroduce the bill. A press secretary for Maloney tells CNBC Make It that Maloney “hasn’t introduced this legislation yet but plans to do so soon.”
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group