Discover Cashback Checking Review

Earn Rewards by Using your Account

Man paying with credit card reader in shop
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Discover Bank has an online checking account that rewards you for using your account. The Discover Cashback Checking account is unique because it offers unlimited 10 cent “rewards.” There are not many other options out there if you want to get paid for using your debit card – credit card rewards regularly offer cash back, but debit card rewards are much less generous.

Discover Cashback Checking Highlights

Availability: as of early 2015, this account is not yet available to the general public.

However, Discover credit card holders and Discover Bank account holders can use the account.

Free checking: the Discover Cashback Checking account is a free checking account (which is increasingly hard to find these days), which means you pay no monthly fees and don’t have to meet minimum balance requirements. You’ll only pay fees for transactions that aren’t part of everyday checking operations (like bouncing a check or making outgoing wire transfers, for example). Discover Bank does not charge fees when you use ATMs, but ATM owners might charge fees.

Spending your money: just like with most checking accounts, you’ll get a debit card that can be used for purchases and ATM withdrawals. Unlike some checking accounts, you’ll also get free checks for those rare occasions when you need to write a check.

Free online bill pay: pay bills from your computer or mobile device. You can schedule automatic payments or simply pay when you need to.

Access to funds: you can also link your Discover Bank account to accounts you hold at other banks, and Discover does not charge you to move funds between accounts via ACH.

Depositing checks: if you don’t want to fund your account with electronic transfers, you can also deposit checks to the account. The easiest way is to make mobile check deposits, but you can also send checks to Discover Bank through the mail.

You can also have your wages deposited via direct deposit.

FDIC insured: the account is covered by FDIC insurance, so your money is safe as long as you keep your balances below FDIC limits.

Cashback Rewards

The main attraction of this account is that you can earn cash by using it. You’ll get 10 cents any time you:

You can earn rewards on up to 100 transactions per month, so you've got the potential to earn $10 per month.

Your “Cashback Bonus” will be added to your account at the end of any month in which you earn a bonus, so you won’t have to wait long for those rewards.

Is it Worth It?

Before opening an account (and going to the trouble of setting up direct deposit and bill payments), it’s worth evaluating how much you’ll actually be rewarded for using the account.

Remember that you earn 10 cents per transaction, and look at your current checking account activity to determine how much you’ll potentially earn. How many times do you swipe your debit card, pay bills online, and write checks? If you have 50 transactions per month that will earn cash back, you can expect to earn $5.00 per month as a bonus.

That may or may not be worth the trouble of switching to this account (if you need to open a new checking account anyway, the account might be a bit more attractive).

To think about the rewards a different way, you might try to figure how much you’ll earn as a percentage of your spending. For example, if you spend $10 per transaction, a 10 cent reward is roughly a 1% reward – that’s not bad, considering that debit card rewards are hard to come by. However, if you spend more than $10 per transaction, you’re earning less, and there might be better options out there.

As an alternative to earning rewards in this account, you might consider other free checking accounts that pay interest. Depending on your account balances and activity, you might earn more or less with those accounts – but it’s always worth running the numbers to figure out what benefits you the most.

If you need ideas on interest-bearing checking accounts, take a look at Capital One 360 and Ally Bank.

Gaming the System

Some people like to get even more of a good thing, and they get very creative about maximizing rewards. Such people might be tempted to split transactions so that they earn more of those 10 cent rewards. For example, they might ring up (and pay for) every item individually when they go shopping. Aside from annoying the people in line behind you, this strategy won’t do anything – Discover Bank explains that they’ll be keeping an eye out for this type of activity.