Discover Bank
Product Name: Discover Online Savings Account
Product Description: Discover’s online savings account earns a competitive interest rate with no monthly fee.
Summary
Discover’s high-yield savings account earns 4.00% APY and has no monthly fees or minimum balance requirements. It is an online-only bank, which means the most common way to access the account is by linking it to a checking account.
Pros
- Competitve interest rate
- No monthly fees
- Highly rated mobile app
- Well-known reputable bank
Cons
- No physical branches
- Can’t deposit cash
Discover has been around for decades. Most people know about its credit cards, which were first introduced in 1985 by Sears. At the time, it was novel because it had no annual fee and offered cardholders a higher-than-average credit limit.
Today, Discover Bank (FDIC# 5649) is headquartered in Greenwood, DE. It offers a wide range of bank accounts, from savings, checking, and CDs to loans and credit cards.
At a Glance
- 4.00% APY
- No fees
- No miminum balance requirements
- Checking account, money market, and CDs are also available from Discover.
Who Should Use Discover Online Savings
If you are in the market for an online savings account, Discover is a solid choice. It consistently has a high interest rate and there are no fees.
The drawback is that there are no physical branches, so you’ll have to access the account through the Discover website or via the mobile app. You also can’t deposit cash.
Discover Alternatives
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| Savings APY | 4.00% APY | 1.00% APY | 4.00% APY |
| Monthly fee | $0 | $0 | $0 |
| Minimum balance | $0 | $0 | $0 |
| Learn more | Learn more | Learn more |
Table of Contents
Discover’s High Yield Savings account earns 4.00% APY with no minimum balance requirement. Interest is calculated daily and applied to the account monthly.
The account doesn’t charge a monthly fee or any other kind of fee. There is no excessive withdrawal fee, stop payment fee, returned item fee, or insufficient funds fee.
There are several ways to deposit money into this online savings account, such as direct deposit, online transfer from a checking account, mobile deposit, and mailing a check. However, you cannot deposit cash at Walmart like with the checking account.
If you set up direct deposit, you can receive your funds up to two days early with Early Pay.
Other Discover Bank Accounts
Discover offers a full range of bank accounts with a few (good) twists.
Checking Account
Discover’s checking account has no fees and no minimum balance requirements. Also, its Cashback Debit card allows you to earn 1% cash back on up to $3,000 in spending per month on your debit card (see website for details). Cashback on a debit card is rare.
Since it’s an online bank, depositing cash is a little more difficult. Discover allows you to deposit cash at any Walmart in the U.S. for free. You can add cash up to four times per day, or seven times per week and the money will be available in your account in about ten minutes.
The ATM network is huge – 60,000 locations – and they use Allpoint and MoneyPass’s networks.
You can also enable Balance+, which acts as overdraft protection. This feature allows you to use your debit card to overdraw the account up to $200 with no fees. To qualify for Balance+ you must have direct deposit of at least $200 per month for two months.
You can also receive your direct deposit up to two days early with Early Pay.
Money Market Account
The money market account earns 3.80% APY for balances under $100,000 and 3.85% APY for balances of $100,000 and above. There are no fees or minimum balance requirements on this account.
You will receive a debit card with this account and can access the account at over 60,000 ATMs for free. Like the checking account, you can deposit cash at any Walmart in the U.S. for free. If you have direct deposit to this account you can get your direct deposit up to two days early.
Certificates of Deposit
Discover offers several CD terms, all with competitive interest rates. To open a CD, there is no minimum deposit. The interest rates are as follows:
- 3-month: 2.00% APY
- 6-month: 3.90% APY
- 9-month: 4.00% APY
- 12-month: 4.10% APY
- 18-month: 3.80% APY
- 24-month: 3.60% APY
- 3-year: 3.50% APY
- 4-year: 3.40% APY
- 5-year: 3.40% APY
As with most CDs, there is a penalty if you withdraw funds before the end of the term. For example, CDs with terms less than 1 year have a penalty of 3 months simple interest, and CDs with terms between 1 and 4 years have a penalty of 6 months of simple interest.
Discover Bank Fee Structure
Discover Bank doesn’t charge very many fees for its bank accounts.
- No monthly maintenance fee on any deposit account (checking, savings, money market, or CDs)
- No minimum balance on checking, savings, or money market accounts
- No fee on ATM withdrawals in-network (60,000 ATMs) on checking or money market accounts
- No fee on check reorders on checking
- No fee on online transfers on checking, savings, or money market
- No fee on online billpay for checking and market
If you’ve ever made an “excessive number of withdrawals” from a savings account, you were probably upset by the fee. It’s Regulation D limits the number of transfers you can make from a savings account. Well, Discover does not charge you a fee for that. They also don’t charge one for a stop payment or insufficient funds.
Discover Mobile Banking Smartphone App
Discover has a mobile banking app that is on par with any other online bank out there. Anything you would want from a branch or online is available – you can check your account, make transfers, find an ATM, and even deposit checks with mobile deposit.
If you have an Apple Watch, Discover Mobile is available on that too. You can access your account, get reminders, and Cashback Bonus notifications.
The mobile banking app gets 4.5 stars on Google Play and 4.9 stars on the App Store.
Discover Alternatives
Capital One 360
Capital One, another bank known for its credit cards, also has some attractive banking options. The Capital One 360 checking has no fees or minimum balance requirements and earns 0.01% APY. When comparing this against Discover’s checking account, you’ll have to balance earning a bit of interest against getting 1% back on your debit card purchases.
Capital One also has a savings account that earns 4.00% APY with no fees. It also offers a wide variety of CDs with competitive rates, but no money market account.
Here’s our full review of Capital One’s 360 Savings account.
American Express
Ameican Express offers a rewards checking, a high-yield savings account and CDs. The checking account earns 1.00% APY on your balance. Compared to Discover’s checking account, this likely earns more as it earns interest on your whole balance, not just what you spend on your debit card. There are also no monthly fees and no minimum balance requirements.
It also offers a high-yield savings account that earns 4.25% APY with no monthly fees or minimums. It also has a variety of CDs with competitive interest rates with no minimum balance requirements.
Ally Bank
Ally Bank is an online bank that offers a checking account and a high-yield savings account which earns 4.00% APY. Neither account charges a monthly fee or have minimum balance requirement.
Ally also offers several different types of CDs with attractive rates and it also has a money market account.
Is It Worth Getting?
If you do not have an online bank, Discover’s online savings account is a solid choice.
It has a competitive interest rate, nice range of certificates of deposit terms and rates, plus it offers a checking account reward – a rarity. They check all the boxes and add a cherry on top.
Their Cashback Debit account product is one of the biggest advantages. You do not see debit rewards very often and 1% cash back on up to $3,000 in purchases each month is very generous.
If you already have an online bank that you like, Discover Bank is similar (the rewards checking is nice but 1% of the maximum $3,000 is only $30, may not be worth switching). Discover Bank has no minimum balance or maintenance fees so it won’t cost you anything – plus you still get a high-interest rate on the account so you don’t lose out there.
Lastly, if awards are important to you, they have a 5 Star Rating Safe & Sound from Bankrate and a 5 Star Rating from Nerdwallet.
You can contact Discover Bank by calling 1-800-347-7000, and they accept general correspondence at Discover Bank, PO Box 30416, Salt Lake City, UT 84130.
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About Jim Wang
Jim Wang is a forty-something father of four who is a frequent contributor to Forbes and Vanguard’s Blog. He has also been fortunate to have appeared in the New York Times, Baltimore Sun, Entrepreneur, and Marketplace Money.
Jim has a B.S. in Computer Science and Economics from Carnegie Mellon University, an M.S. in Information Technology – Software Engineering from Carnegie Mellon University, as well as a Masters in Business Administration from Johns Hopkins University. His approach to personal finance is that of an engineer, breaking down complex subjects into bite-sized easily understood concepts that you can use in your daily life.
One of his favorite tools (here’s my treasure chest of tools, everything I use) is Empower Personal Dashboard, which enables him to manage his finances in just 15-minutes each month. They also offer financial planning, such as a Retirement Planning Tool that can tell you if you’re on track to retire when you want. It’s free.
Opinions expressed here are the author’s alone, not those of any bank or financial institution. This content has not been reviewed, approved or otherwise endorsed by any of these entities.
