This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Cash-Back Bank Accounts Hit Mainstream With Discover

NEW YORK ( TheStreet) -- Cash-back credit cards are a common and widely used tool in the financial consumer's arsenal. But cash-back bank accounts?

Discover (DFS - Get Report) may be the biggest name in this growing field. It has a brand-new Cashback Checking account that pays customers back 10 cents per debit card purchase, for paying a bill online and even for simply writing a check. The bank adds the 10 cents back automatically to the customer's checking balance after the transaction.

The account comes with some other, more traditional features, including no monthly fees and no minimum balance requirements, but it's the cash-back feature that makes it so interesting.

The option is available to only a limited number of Discover customers now, but the bank says a full rollout is scheduled for next year.

"Our goal for Discover Cashback Checking is to provide customers with the best value, service and rewards in the industry," says Roger Hochschild, Discover's president and chief operating officer. "We combined what customers most want in a checking account with the latest technology to provide a truly breakthrough product."

Breakthrough product? As far as checking accounts go, a cash-back account may actually qualify. Few banks have them -- Perkstreet Financial comes to mind, and some credit unions, such as Randolph Brooks Federal Credit Union Technology providers such as PayPal and Google (GOOG) have entered the sector as well, with mobile payments and mobile wallets.

Banks are turning to cash-back accounts to attract customers beaten down by basement-level interest rates, but there's another reason: While banks rarely earn a profit from checking account programs, they do earn money on accounts such as a retirement fund or a money market account. That's why financial institutions consider checking accounts "gateway" products -- they lead consumers to other, more profitable, bank programs.

Is a cash-back checking account a good idea for consumers?

Maybe, especially if you tend to use your debit card as your primary means of making a purchase and use online bill payment a lot. Bank consumers with subpar credit scores may also benefit, since those customers may not qualify for a cash-back credit card. Small-business owners who rely on their debit card to make purchases may also want to give cash-back accounts a closer look.

Just remember: You're not going to get rich with one. The Discover model is a good example of that, since you'd have to make 200 transactions to get back $20 per month.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
DFS $56.27 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs