(UPDATE: MyBankTracker got a sneak peek at Discover Bank’s online checking account.)
Discover Bank plans to launch a no-fee online checking account to round out its repertoire of online deposit products, which already includes a high-yield savings account, a money market account and certificates of deposit (CDs).
“We are now running a pilot program ahead of the formal launch,” said Carlos Minetti, president of consumer banking and operations at Discover, during an investor presentation after last week’s first-quarter earnings announcement.
At the end of first-quarter 2012, Discover Bank held $27.3 billion in deposits — a 25 percent increase from the same quarter last year.
“Some of the key features we’re testing are no maintenance fees and new functionality that maximizes online content and mobile transactions,” Minetti added.
As new regulations threatened banks’ revenue in the past few years, banks eliminated their free checking products and implemented monthly maintenance fees. Many of these monthly account fees can be waived with a specified minimum balance.
Of the 10 largest U.S. banks, only PNC Bank offers free checking. The average monthly fee for a non-interest checking account at the top 10 banks is $9.93.
“Maintenance fees for checking accounts are becoming increasingly common, and we believe our no-fee product will be a welcomed option for our consumers.”
The new checking account will join the many attractive options already offered by online competitors such as ING Direct, Ally Bank and EverBank. Deposit accounts at online banks tend to carry higher interest rates, lower fees and better perks because they are not burdened by the costs of maintaining physical branches.
Currently, the rates on Discover Bank’s entire line of deposit accounts are among the highest available nationwide.
Discover Bank’s no-fee checking account is expected to launch sometime this year, Minetti said.
A Discover spokesperson declined to share more details on the pilot program and the timing of the launch.