Discover is doing away with fees of any kind on its checking, savings, money market and certificate of deposit accounts.
The move would be a first for a large bank and comes as smaller online fintechs offer no-fee options and high-yield savings to woo younger and more price-conscious Americans.
Going forward, Discover won’t charge fees for monthly maintenance, checkbook orders, replacement debit cards, insufficient funds, excessive withdrawals, falling below minimum balances and stop-payment requests.
The change will affect the bank’s 1 million customers who have a Discover deposit account and comes after the bank piloted a program that forgave the first fee a customer incurred.
“What we keep hearing resoundingly – and not just from millennials and Gen Z – is that there’s been a fundamental change in how people think about fees,” said Arijit Roy, vice president of deposits at Discover. “They create a very negative emotion, so we thought we take the next step to eliminate all fees.”
The average fee banks charge to maintain a checking account is $13.58 per month, or $162.96 a year, according to a February MoneyRates.com survey. The percentage of checking accounts without monthly fees dipped to 30.40%, down from 31.78% six months ago, the survey also found.
Online banks are more likely to offer free checking.
Almost two-thirds of online checking accounts have no monthly fees compared with just a quarter of traditional, branch-based accounts. When online checking accounts charge monthly maintenance fees, they are often lower than those charged by branch-based accounts, MoneyRates found.
Discover, which re-launched its checking account a year and a half ago, helps to change the free banking landscape. Bigger banks typically waive checking or other fees if a customer has more than one account at the institution or meets a minimum balance threshold, said Michael Moebs, CEO of Moebs Services, a bank consulting firm.
“It would be the only bank, thrift or credit union I know of that has eliminated fees on all its deposit accounts,” Moebs said.