Capital One is buying Discover

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According to reports from the Wall Street Journal and other major media outlets, Capital One is acquiring Discover Financial Services. That reportedly represents a notably large acquisition for the financial sector and beyond credit cards it would give Capital One access to a larger share of the deposit and debit market. I wouldn’t recommend rushing out to get a new Discover card as I anticipate this process will be lengthy.

The media reports indicate that Capital One intends to keep the Discover brand, so it isn’t immediately clear that this will have impact on the Discover-branded offerings. Of course, since those cards would presumably be issued by Capital One, they may become harder to get for those who have opened many credit card accounts.

One has to wonder whether this acquisition would get Greg a backdoor way to get back into Capital One’s good graces after they shut down his account and redeemed all of his points for half a cent each with no explanation and then totally ghosted him on follow-up attempts to find out why (and no, he wasn’t spending in any irregular ways).

While it sounds like Capital One and Discover have come to terms on the deal, I imagine that this will face regulatory scrutiny. I’m not sure what the timeline would be for everything coming to fruition, but I imagine it will be quite a while before anything is finalized. In the meantime, I expect it will be business as usual for both entities in the short term (and probably even in the extended medium term for the next couple of years at least). I probably wouldn’t be rushing out to get a Discover card with any feat of changes given that the process will surely take at least a couple/few years.

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Gigi

I didn’t know about Gregs’ situation with C1. It is insane! It makes me a little wary about leaving my points not only in C1 but at any bank. I’ve seen Amex and Chase accounts also being closed down and in some cases losing all points. Nick, have you ever had any issues like this with any bank? I don’t do any MS or similar but either way makes me a bit nervous. Have over 1M points across all accounts.

JohnB

I give this a “not gonna happen” rating. Big bank mergers get a lot more scrutiny now, versus the 2008-2009 period. There is big risk for 2 large, mostly consumer credit issuing banks, merging. Neither Discover nor Capital One are full service banks that offer the full range of commercial banking products. With that in mind, I can see the bank regulators giving this a thumbs down.

Zzz

Nah, this is 100% going through. The regulators are pushing consolidation, generally speaking.

JohnB

I guess you have not been paying attention… Regulators are not into making more “too big to fail” financial institutions. Discover has significant deposits that Cap1 wants, but cannot generate on their own. Yellen’s comments are not the position of the Justice Dept, which is not encouraging mergers at all.

VIS

And this morning my upgrade offers from CapOne Quick silver card are gone. I guess I will be using Quick Silver once a year from now on to keep it alive.

Deva

It’s probably time to get a Discover card since Capital One doesn’t like me because I don’t carry balances.

Andrew

I hope this doesn’t mean the end of Discover. They were the first major bank card I applied for rewards earning for when new to the world of credit. And they actually have invested in a functional website and decent call centers – more than I can say for Citi or others.

For anyone playing the bank bonus game Discover also has some good savings account offers where it doesn’t hurt to leave your money parked in their HYSA.

king

Forget about getting backdoor entry to C1 . I had a kohl’s card , which was then bought by C1 and they closed my Kohl’s card citing old C1’s relationship. (Heavy MS on Virtual card )

David Arnett

i just wondered what will happen to the Discover network as Discover is like Amex in being both the issuing bank and network. Given what we saw with the airlines and things over the last 3 years with a corrupted judicial system, this link up may never happen, but it’s interesting to think about the possibility of Capital One switching to the discover network. The network might be a sticking point regarding antitrust nonsense if Capital One doesn’t promise to maintain it. Discover really never did anything interesting to justify its existence over the last 13 years when credit card rewards really blossomed.

John

The double it promotion when Discover had their portal may have been the greatest long term reward bonus of all time.

One could easily argue they drove the current rewards to “blossom” by offering that promo.

I believe they were also th first card to “pay you back” and for that matter they are widely accepted in Asia where other cards aren’t.

askmrlee

Discover at launch was pretty much the only no-annual fee cashback credit card. They partnered with Japan’s JCB and China’s Union Pay and those relationships continue today (this is why you often see Diners, JCB and Union Pay logos where Discover is accepted in the US). One positive is that both Capital One and Discover do not charge foreign transaction fees on any of their cards.

Gene

Hopefully this kils the CCCA, which has been heavily funded by Discover’s donations to Dick Durbin

Stookey

Discover is such a lame ass brand. I literally get 4 offers per week from them in my snail mail. Back when Sears started this brand, it was supposed to be a major disrupter of the big two, MC and Visa. Unfortunately for Sears, the initial excitement was followed by profound apathy as fewer than expected retailers were interested in supporting this 4th in line behind AMEX. Good luck to C1 on making a horse race of this dog. Access to a muted customer base is all they will really get. Hopefully, it will go the way of Diners Club and Carte Blanche. Dead but for the name.

askmrlee

While Discover is associated with Sears, it came from the Morgan Stanley side of Sears. Diners Club and Carte Blanche are not dead – Discover owns the Diners Club network and franchises the card brand to other banks. In the US and Canada BMO only issues corporate Diners Club cards, but those who still have their legacy consumer cards can keep them. For $95/year you get a true Chip and PIN primary card (PIN first authorization, not secondary like Barclays), unlimited no-fee Priority Pass lounge and restaurant visits for the cardholder only (additional user card is only $35/year), primary car rental insurance (up to $75K car value which is the same as CSR and Amex Platinum and $100K with a Carte Blanche), and the ability to transfer to Alaska, Southwest, British Airways, Delta and Virgin Atlantic, El Al, Iceland Air, Thai, South African and IHG

Last edited 1 month ago by askmrlee
JohnB

Actually Sears owned Dean Witter. Sears sold DeanWitter, Discovery & Co. to Morgan Stanley in 1997. Sears never owned any part of Morgan Stanley.

Shadrach

I would be happy to own a lame brand that is worth 35 billion.

Tony

There’s nothing to be excited about the Discover card, is there? The quarterly 5% bonus categories have mostly been the same ones offered by its competitors with better returns (5x miles are always better than 5% cash).

askmrlee

Last summer Discover card had 5% cashback using mobile wallets. And with no-foreign transaction fees, it made my Japan trip 5% cheaper.

Andrew

It’s a decent cash back card, not targeted at our crowd. I’ve had one forever and the rotating categories are typically offset from the Chase Freedom cards. More opportunities for 5% back but less relevant with newer choose your own category cards like Citi Custom Cash.

I’ve seen some more obscure notes that the first year double rewards might include targeted AU offers or other spending bonuses – stacking those with the 5% categories and the ability to redeem for some gift cards with a bonus might get you close to 15% back.

JohnB

Occasionally, Discover will offer doble cash-back to cardholders that not have used their card for a long period of time. I know because, they offered it to me, twice.

Kevin

Discover IT X with $395 annual fee and hopefully priority pass that has access to airport restaurants.

Fuzzy

Lol and their spokesperson will be just as annoying as Jennifer Garner except not cute.