Discover Bank is dropping fees from its online checking and savings accounts. Discover’s deposit products already have no monthly maintenance fees. But the internet bank (they have one branch) still had several fees of $15 and $30 for things like insufficient funds, excessive withdrawals and wire payments. Starting today, those fees will be gone.
“We wanted to be the first major bank to eliminate all fees from deposit products,” Discover executive Arijit Roy said in a telephone interview with CNBC. “Fees erode trust and create a very negative emotion, and millennials and Gen Z customers in particular don’t like ‘gotchas’ or fees buried in the fine print.”
Customer penalties are a significant source of revenue for banks. The 10 biggest banks collected more than $11 billion in overdraft fees in 2017 for example. But after U.S. government bailed out banks during the financial crisis and all the fintech startups that have no fees, customers are getting more sensitive when they get charged $20 or $30 from their bank.
Discover started to automatically waive fees the first time a customer incurred one. That also applies to the first late payment on their credit cards.
Discover, which also runs its own credit card network, has about $48 billion in deposits and 1 million bank customers.