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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

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) 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.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,960.57 -123.23 -0.72%
S&P 500 1,978.34 -9.64 -0.48%
NASDAQ 4,449.5640 -22.5440 -0.50%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs