M&A News: What the Capital One–Discover $35B Merger Means for Cardholders

After months of planning and regulatory review, Capital One Financial Corporation (COF) has officially completed its $35 billion acquisition of Discover Financial Services (DFS). For everyday cardholders, this merger raises key questions on how it might impact your credit card benefits and what changes might be on the way. Let’s break down what it could mean for you.

A Quick Recap of Merger Details

Capital One announced its plan to buy Discover in February. In April, U.S. regulators gave conditional approval for the all-stock deal. The merger will create the sixth-largest bank in the U.S. by asset size, with Capital One owning 60% of the combined company and Discover shareholders holding 40%.

Through this deal, Capital One aims to grow its market and compete with big players like Mastercard (MA) and Visa (V).

What’s in Store for Cardholders?

Capital One stated that customers shouldn’t expect any immediate changes to their accounts following its merger with Discover. However, in the coming months, Capital One account holders may start seeing new offerings, such as cashback debit cards and other reward options.

Meanwhile, Discover customers will benefit from expanded access to Capital One’s network, including over 250 bank branches and more than 50 Capital One Cafes across the country.

What Experts Say

Overall, experts believe the deal could improve the customer experience. They expect new features and perks like cashback rewards, sign-up bonuses, and access to fee-free checking accounts.

Eric Fruits, a senior expert at the International Center for Law and Economics, says that one of Capital One’s first steps after the merger will probably be to switch its debit cards to use Discover’s payment network. This change could increase the fees Capital One earns from card swipes, bringing in more money. Fruits added that within the next few months or a year, customers might see new rewards debit cards. Because of the merger, Capital One can bypass certain rules (called the Durbin amendment), allowing it to offer better rewards. This could be a big benefit for Capital One and its customers.

Meanwhile, Kaiji Chen, an economics professor at Emory University, also believes that Capital One will likely offer rewards debit cards to its customers soon.

Is Capital One a Good Stock to Buy?

According to TipRanks, COF stock has a consensus Strong Buy rating among 15 Wall Street analysts. That rating is based on 11 Buys and four Holds assigned in the last three months. The average COF price target of $212.27 implies 7.6% upside from current levels.

See more COF analyst ratings