Capital One has come to terms to purchase Discover Financial in a deal that will be worth north of $28 billion. The exact terms will be announced tomorrow.
The company plans to keep the Discover processing network and move some cards to that network, but it will also continue to issue the more widely accepted Visa and Mastercard. It will keep the Discover brand active even after the merger.
Both banks offer high yield savings accounts which would stick around as well.
Of course, the deal will need to clear regulatory approval, which may not come easy under the Biden administration.
Capital One only started competing for high-end customers when they shocked the mileage world in 2018 by announcing their miles would convert to airline and hotel programs. They have since launched premium credit cards that target a very different clientele than they had beforehand.
Discover’s miles on the other hand have never been transferrable into airline miles or hotel points, though their first year offer for 3 miles per dollar is strong. Capital One allows point transfers between accounts, so perhaps those will be transferrable to airline miles one day?
I also like that Discover provides a true FICO score for free for cardholders, so hopefully Capital One will keep that feature and bring it to their own cards.
Discover also offers US based customer service, while Capital One typically offers offshore customer customer service. We can certainly hope for higher-end and more empowered customer service reps, at least on higher-end cards.
Overall, this signals Capital One’s continued efforts to become a real competitor to AMEX and Chase in the credit card market. And more strong competition seems like a good thing to me.
What do you think of this merger?
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24 Comments On "Capital One Will Buy Discover"
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Yikes, that’s a big merger.
I really like the quarterly 5% bonus, as well as the Amazon enrollment deals that Discover has (I got 50% off an order in Dec 2023). I hope those two things aren’t phased out.
discover does have good US based CS but thats the only thing i could think of… oh and 5% back with amazon during Q4
Hard to get too excited about 5% back on Amazon in Q4 when you can do much better year-round with Ink Cash. Or tie it year-round with an Amazon card.
I’m just hoping that Discover cash-back will be able to be transferred to CO miles. I miss the days of $10 cash-back every month from paying your credit cards bills every day with a Discover bank account.
transferrable into airline miles or hotel points, though their first year offer for 2 (not 3)or 10 miles per dollar is strong.
FTFY
1.5 x 2 = 3
Discover already dropped their HYSA APR last week… can’t see how this is good for the consumer.
Source?
This is true, Discover’s HYSA was 4.35% now it’s 4.30%. Capitol one HYSA is (at the moment) 4.35%.
Oh, I thought he meant “dropped” as in they’re no longer offering the account. Changes up and down are market/rate dependant. They’ve been constantly going up overall for the past 2 years. I highly doubt the most recent .05% change has anything to do with a potential Capital One transaction.
I get my fico score from capital once, credit wise on the capital one app
That’s FAKO, not FICO.
I believe Amex app under personal cards gives you real FICO (interestingly, my FAKO is about 60 points higher).
Will be interesting to see what SUBs come with this deal
I almost always get an US rep when I call C1.
Does this mean that discover will eventually be made into visas and MasterCards? Because I’ve been to many places (out of USA) and it wasn’t excepted… So I would want that…
Probably not. According to the WSJ article, it’s likely that some C1 cards will run under the Discover system. But because Discover cards aren’t widely accepted overseas, they’ll keep some Visas and MCs.
I was with ING before capital one bought them out – I can only think of negatives since – they got rid of sub accounts, sold off and separated their investment accounts – pain to log in etc.. their high yield savings accounts was mediocre compared to ING. They fooled all their long time customers who had high yield savings accounts – for years the Hysa fluctuated based on the going rate, they decided to create a similar name account for their hysa advertise the great rate – but their previous customers had no idea they needed to change accounts as the one they had for 20 years just stopped being a high yield!(There’s actually a class action for that scheme) their cc line not much better- before I even received my venture x I as others had my account put on financial review! Mid AF they pull lounge credits, they took forever to get the airbnb credits (ended up being done manually)- Almost got forced into another AF to get the credits.. What about reports of people getting multiple credits in error – not a competent bank in my opinion!
I miss ING! We got an incredible mortgage rate through them. Saved us so much money.
Only have my starter sock drawer discover card but I’ve been pleasantly surprised with their targeted offers especially during q3/q4 that I’ve had to dust it off. 6% extra CB on all purchases, extra 4% CB on PP (they even stacked) and various 0% apr offers.
They have their niche.
Purely from a “credit card points enthusiast” perspective, I like having more banks — especially with Discover being fundamentally different from the Visa/MC bank issuers. They have some niche benefits, and more choices are better than fewer choices. But from a pure banking perspective, it’s hard to see how America really NEEDS an independent Discover. It’s hard to see how a more typical American will be materially harmed.
Visa and Mastercard can raise their fees?
“Capital One typically offers offshore customer customer service”
Interesting I always get someone from the USA
Do you think i will start getting better rewards for my Discover acrd