Discover® Bank Online Savings Account Review
Thursday, November 14, 2024
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
Cons
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.
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
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.
Discover offers a full range of bank accounts with a few (good) twists.
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.
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.
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:
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 doesn’t charge very many fees for its bank accounts.
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 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.
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.
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 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.
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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