If you hate paying bank fees, this ought to make your day a bit brighter.
Beginning May 7, anyone with an eligible Discover Bank account will have a single fee automatically forgiven each calendar year. The change will apply to customers with a Discover checking, savings or money market account.
At a time when bank fees are on the rise, Discover’s new terms may seem like a breath of fresh air. The first fee forgiveness program is evidence of the online bank’s efforts to develop features that help customers save money and find their financial footing.
“Discover’s mission is to help people spend smarter, manage debt better and save more so they achieve a brighter financial future, and so we’re always looking for new ways to design our products with customers in mind,” says Arijit Roy, vice president of deposits at Discover. “We understand that life is busy and sometimes customers may receive a fee on their account.”
This is the first time Discover is implementing a policy that waives fees for its customers with deposit accounts. But the financial services company has rules that minimize fees for credit cardholders. If you’re late on a minimum payment for the first time, for example, there’s no charge.
First fee forgiveness
Under its new policy, Discover Bank plans to forgive some of its mostly costly fees. Eligible fees include:
- Insufficient funds fee: $30 for each item, with a maximum of one fee per day.
- Stop payment fee: $15 per order to stop payment for 6 months.
- Excessive withdrawal fee: $15 per item beyond six withdrawals and transfers per calendar month.
- Money market minimum balance fee: $10 for balances that drop below $2,500 after the third statement cycle.
Customers won’t have to take any steps to have a fee waived, Roy says. If you’re hit with one of the fees on the list, Discover will waive the charge the first time it occurs. The bank will apply the fee and then credit your account.
If you’re hit with two eligible fees in one day, the highest one will be forgiven. And if you have both a checking and savings account with Discover, you’re eligible to have one charge waived for each account.
Spelling out an unwritten rule
The fact that a bank is willing to waive a fee shouldn’t come as a surprise. More often than not, banks forgive fees at least once every 12 months, says Joe Ridout, a legislative advocate for Consumer Action, a nonprofit advocating for consumers’ rights.
But it’s not something many banks broadcast.
“Discover’s policy makes this unwritten policy explicit, so consumers are better informed and it also saves them from having to invest time calling up the bank, waiting on hold, explaining the situation and requesting the fee waiver,” Ridout says.
Discover’s offer to waive fees automatically is a bonus, Ridout adds. Generally, you would have to reach out to your bank in order to get a fee waived. Banks may be more likely to forgive fees voluntarily under special circumstances, like when there’s a devastating hurricane or another natural disaster.
Not a reason to switch banks
Discover’s first fee forgiveness program may seem appealing, particularly if you’re someone who occasionally pays bank fees. But for many consumers, the value may be limited.
“It’s something that is valuable to the person who slips up once. It eliminates something that could otherwise be a real pain in the neck or annoyance,” says Greg McBride, CFA, Bankrate’s chief financial analyst. “It’s not necessarily something that’s going to prompt somebody to choose them over a different financial institution.”
Indeed, if you’re someone who spends a substantial amount of money on bank fees, an annual opportunity to save $30 on overdraft fees may not mean much.
“While waiving one fee a year is a good start, expensive or unpredictable fees are hard for people to manage and anticipate,” says David Rothstein, principal for the Cities for Financial Empowerment Fund. “That’s why accounts like those certified as meeting Bank On National Account Standards — with no ability to overdraft and therefore no overdraft or insufficient funds fees — are proving so popular with banks, credit unions and their customers across the country.”
Getting the bank to waive your fees
If you’re not a Discover customer, you’ll have to be proactive if you want a bank fee waived. Be prepared to negotiate and plead your case. Getting the bank to forgive a fee or two per year may be easier if you have a good track record.
“Where the fee is more likely to be waived is someone who’s a long-standing customer, somebody who has multiple account relationships, or somebody who has a lot of money with the bank,” McBride says. “If you only have a checking account, never keep more than $300 in it and are overdrawing the account on a consistent basis, you don’t really have a leg to stand on.”
If the bank won’t honor your request, you could threaten to leave. But you should only do so if you’re serious about dumping your bank.
“Don’t threaten to leave unless you’re prepared for them to call your bluff,” McBride says.
Though bank fees can add up, dodging them may be easier than you think. You can avoid them entirely by looking for a no-fee bank account. In a recent Bankrate survey, 38 percent of banks had non-interest bearing checking accounts that don’t charge fees or come with minimum balances. Fintech companies like Chime and Simple also offer fee-free bank accounts.