What the Capital One-Discover Deal Could Mean for Bank Accounts

Capital One’s plan to buy Discover could form the largest credit card issuer in the country and the sixth-largest U.S. bank by asset size in late 2024 or early 2025. Federal regulators and shareholders will still need to approve it.

In addition to boosting the banks’ credit card businesses, the deal announced Monday “also enables us to accelerate the growth of our national digital-first consumer banking business by adding another consumer deposit franchise and the vertical integration benefits of the debit network,” Richard Fairbank, chairman and CEO of Capital One, told investors in a call on Tuesday.

However, the impact on banking customers isn’t clear yet. The banks have similar strengths and features across all three types of deposit accounts: checking and savings accounts and certificates of deposit. The notable differences are that Discover uses its own payments network, compared with Capital One’s participation in the Mastercard debit network, and that Capital One has branches.

Capital One plans to keep Discover’s brand separate.

If you have bank accounts at Capital One or Discover® Bank, here’s what you might expect from this deal.

“We intend to begin migration of credit and debit spend to the Discover network in the second quarter of 2025,” Andrew Young, chief financial officer at Capital One, told investors on the call Tuesday.

Moving Capital One debit cards from Mastercard onto Discover’s network might mean some limits on global usage, given Discover’s smaller network.

Capital One checking accounts have debit cards on Mastercard, which is one of the two biggest global card payment networks alongside Visa. Discover’s debit card network, on the other hand, has a similar reach in the U.S., but not internationally. Discover debit cards work for international ATM withdrawals and purchases at participating businesses in primarily North American countries: Canada, Mexico and some Caribbean nations.

A big perk for Discover® checking and savings account customers would be access to Capital One’s 259 branches and 55 cafes, largely focused in the biggest U.S. cities. In contrast, Discover has one full-service branch. The new company would remain based in Capital One’s headquarters in McLean, Virginia, while preserving a significant presence around Chicago, where Discover is based.

The deal would also allow customers to use over 80,000 fee-free ATMs nationwide, more than either bank offers now. Capital One’s access is to over 70,000 ATMs and Discover’s is closer to 60,000 ATMs. Capital One and Discover largely overlap due to partnering with third-party ATM networks such as MoneyPass and Allpoint.

Customers would also be able to deposit cash at over 16,000 locations. Capital One and Discover each offer this feature, though in more limited capacities. Cash is accepted at ATMs with Capital One logos, which doesn’t include MoneyPass or Allpoint ATMs. Discover customers can deposit cash at Walmart stores.

Michael Imerman at the University of California, Irvine, who has studied the digital banking landscape for the past seven years, sees Capital One as one of the most innovative banks. He thinks the acquisition may strengthen the bank’s digital offering.

“This merger would allow the combined institution to continue to roll out more technologically advanced solutions in banking at a faster rate and to a larger customer base. As a result, the combined bank would be in a position to be more competitive against digital banks and fintech competitors that have made significant progress moving upmarket in the consumer banking space in the past few years,” Imerman, assistant professor of teaching in finance and director of the master in finance program at UCI Paul Merage School of Business, said in an email.

The FDIC-insured bank accounts at Capital One and Discover mostly overlap in costs and features. Their checking and savings accounts have no monthly fees or overdraft fees. Savings accounts and certificates of deposit have competitive rates. They both belong to Zelle’s fast payments network and have direct deposits up to two days early.

Discover lets you earn 1% cash back on up to $3,000 in debit card purchases each month, a rare and generous perk. Capital One offers interest on its checking. If Capital One provides cash back on debit cards on the Discover network, that would be unique for such a banking giant.

Imerman doesn’t foresee major impacts on customers at either bank, given their histories of high customer satisfaction, though there is the possibility of seeing more perks.

The deal will likely result in more streamlined services and more extensive product offerings with more attractive features, including credit card rewards, cash-back bonuses and higher-yielding savings products, Imerman said.