Updated September 9, 2018

Discover Bank Review: Pros and Cons

Read more about Discover Bank
This article contains references to products from our partners. We may receive compensation if you apply or shop through links in our content. You help support CreditDonkey by reading our website and using our links. (read more)

Discover offers high interest rates on its online savings and CD accounts. But there are downsides. Here's what you need to know before you open an account.

Discover Bank Bonus
Online Savings Account - Earn 2.10% APY

Overall Score

4.8

Savings

4.5

Checking

4.5

Money Market

5.0

Customer Service

5.0

Mobile App

5.0
5-point scale (the higher, the better)

Pros and Cons

  • High yield
  • Cashback checking
  • 24/7 customer service
  • No interest checking
  • $2,500 minimum deposit for CDs

Bottom Line

Solid online bank with high APY rates and good customer service

Traditional savings accounts pay very little interest. If you want to earn a more impactful return on your savings, online banks often offer higher rates.

In this article, we will look at how you can use Discover's Online Savings Accounts and CDs to help grow your savings.

What is Discover Bank

Based in Greenwood, Delaware, Discover Bank is an online bank owned by Discover Financial, the company behind the Discover credit card.

It offers traditional banking products like checking, savings and CD accounts, plus a variety of loans including student and home-equity.

Customers can manage their finances through the bank's website or mobile app. They can also withdraw funds for free using the nationwide AllPoint ATM network. Additionally, Discover also operates one full-service location in Delaware.

Discover Bank has 24-7 customer support, including a dedicated line for fraud prevention.

Is Discover Safe?: Discover is FDIC insured. This means that if Discover defaults, the federal government guarantees the balance in your savings account, up to $250,000.

How It Works

Discover offers 4 different deposit account types. They all work in different ways.

  • Discover's Cashback Checking gives you cash back when you use your debit card. No monthly service fee and no minimum deposit.

  • Discover's Online Savings has a high yield savings rate. You are limited to the number of transfers and withdrawals a month. No monthly service fee and no minimum deposit.

  • Discover's Money Market gives you more flexibility such as ATM withdrawals and check writing. But it requires a $2,500 minimum deposit.

  • Discover's CDs require you to deposit money for a set period of time. Withdrawing funds from a CD before the term has ended will incur a penalty. CDs have a minimum deposit of $2,500. Due to these requirements, some CDs earn a higher APY than savings accounts.

Now that we've covered the basics, let's get into the specifics.

Discover Bank Rates and Promotions 2019

© CreditDonkey

    Online Savings Account - Earn 2.10% APY

    • No minimum opening deposit
    • No monthly fee
    • No minimum balance required to waive monthly fee

    Discover Online Savings - $150 Cash Bonus

    Apply for your first Discover Online Savings Account by 7/1/19, 11:59 PM ET, online or by phone. Enter Offer Code CD619 when applying. Deposit into your account a total of at least $15,000 to earn a $150 Bonus or deposit a total of at least $25,000 to earn a $200 Bonus. Deposit must be posted by 7/15/19, 11:59 PM ET. Maximum bonus eligibility is $200.

    Offer not valid for existing or prior Discover savings customers or existing or prior customers with savings accounts that are co-branded or affinity accounts provided by Discover. Account must be open when bonus is credited. Bonus will be credited to the account by 7/29/19. Bonus is considered interest and will be reported on IRS Form 1099-INT. Offer may be modified/withdrawn without notice. See advertiser website for full details.

    Expires 7/1/2019

    Discover Online Savings - $200 Cash Bonus

    Apply for your first Discover Online Savings Account by 7/1/19, 11:59 PM ET, online or by phone. Enter Offer Code CD619 when applying. Deposit into your account a total of at least $15,000 to earn a $150 Bonus or deposit a total of at least $25,000 to earn a $200 Bonus. Deposit must be posted by 7/15/19, 11:59 PM ET. Maximum bonus eligibility is $200.

    Offer not valid for existing or prior Discover savings customers or existing or prior customers with savings accounts that are co-branded or affinity accounts provided by Discover. Account must be open when bonus is credited. Bonus will be credited to the account by 7/29/19. Bonus is considered interest and will be reported on IRS Form 1099-INT. Offer may be modified/withdrawn without notice. See advertiser website for full details.

    Expires 7/1/2019

    Certificate of Deposit

    • 2.50% APY for 12-month term
    • 2.60% APY for 24-month term
    • 2.65% APY for 36-month term
    • 2.75% APY for 48-month term
    • 2.85% APY for 5-year term

    Online Checking Account - Earn Cash Back

    • 1% cash back on up to $3,000 in debit card purchases each month
    • No monthly fee
    • Access to over 60,000 no-fee ATMs in the U.S.

    Money Market Account

    • Earn 1.95% APY for balances under $100,000
    • Earn 2.00% APY for balances $100,000 and over

    IRA Certificate of Deposit

    • 2.50% APY for 12-month term
    • 2.60% APY for 24-month term
    • 2.85% APY for 5-year term

    Discover Cashback Checking – Up to $30/Month Cashback

    Earn 1% cash back on up to $3,000 in debit card purchases each month, for a total of up to $30 cashback per month. Discover Cashback Checking has no minimum balance requirement, no monthly service fee, and free online bill pay.

Online Investor Savings

© CreditDonkey

Discover is an online bank, so they don't have many of the overhead costs that brick-and-mortar banks do. This allows Discover to offer no minimum deposit and a high APY on its Online Savings Account. Here are some additional details:

  • 2.10% APY. No monthly service fee and no minimum deposit.
  • No account opening fees
  • No monthly maintenance fees
  • Daily compounding interest
  • Free online and mobile banking
  • FDIC insured

As with any savings account, you'll be limited to 6 withdrawals per month. This is a federally-imposed limitation.

If you need to withdraw money from your Discover savings account, you have a few options: internal Discover transfers, external transfers to another bank, wire transfers (a charge applies), and mailed checks.

Compare Savings Account Promotions

Certificate of Deposit (CD)

© CreditDonkey

For CDs, you must deposit a fixed amount of money for a fixed amount of time.

There are a few key factors to consider when deciding on a CD: the term length, the minimum deposit, and the APY. Discover also offers some retirement account qualified CDs, which can be a good option to supplement your retirement savings.

Here are your options:

  • Term CDs: 0.35% to 3.05% APY. Terms of 3 months to 10 years. 12-month CD APY of 2.50%. 5-year CD APY of 2.85%. Minimum deposit of $2,500 to open.

  • IRA CDs: Discover offers a retirement IRA CD option as well, if you qualify. Both Roth (post-tax) and Traditional (pre-tax) options are offered. Terms and APY of these products are similar to that of Discover's Term CDs.

    You can rollover money from another type of retirement account (like a 401k) or transfer an IRA to Discover.

Cashback Checking

Earn 1% cashback on up to $3,000 in debit card purchases each month. No monthly service fee and no minimum deposit.

Discover's checking account doesn't offer interest, but it does give cash back when you use its debit card. This is a unique perk not offered by most other checking accounts.

Other features include:

  • No minimum balance requirement
  • No fee for online bill pay
  • No fee for check reorders
  • No fee for replacement debit card
  • No fee ATM withdrawals at over 60,000 Allpoint® or MoneyPass® ATMs

Money Market

1.95% APY under $100,000; 2.00% APY $100,000 or more. No monthly service fee. $2,500 minimum deposit.

Discover Money Market offers very competitive rates. The rate is higher than what many other online banks offer. This is a good alternative to the Savings account if you want more flexibility in how you use your money.

The Money Market account allows you to write checks, pay bills, and make debit card purchases. However, federal regulation limits you to only 6 of these types of transactions per month. You can, however, make unlimited ATM withdrawals.

Other features include:

  • Deposit checks through Discover app
  • Online bill pay
  • Free debit card and checks
  • No fee ATM withdrawals at over 60,000 Allpoint® or MoneyPass® ATMs

Locations

Discover is an online bank, which means you can't just walk into a neighborhood branch to do business and ask questions.

Discover only has 2 physical locations in Delaware:

  • A full service bank at 502 E. Market Street, Greenwood, DE
  • An administration office at 12 Read's Way, New Castle, DE

However, if you need cash, you can withdraw cash surcharge-free at any of the 60,000+ Allpoint® or MoneyPass® ATMs. In the US, Allpoint® ATMs can be found in popular stores like Target, Costco, Speedway, Safeway, and drugstores.

Why We Like Discover

Here are a few things that we like about Discover's online savings accounts and CDs:

  • Low minimum deposits: If you have just started saving or want to set aside a small balance, Discover can be a great choice. Their Online Savings have no minimum balance requirements at all. Their deposits for term CDs and IRA CDs are some of the lowest in the industry.

  • High rates: Discover's Online Savings offers such a high APY that it outperforms some of their short-term CDs. This is great news for anyone looking to save, but especially for those who can't pay the high minimum deposits that some other banks require. And if you meet a higher minimum deposit, you can earn more on a CD, depending on term length.

  • No fees: Discover cuts out many fees that other banks profit from. For example, you will not be charged any account opening or maintenance fees.

  • Retirement options: Discover offers IRA CDs, which can be utilized in a retirement planning strategy.

Reasons You Might Skip Discover Savings

For all of Discover's advantages, there are some downsides that need to be considered:

  • No branch locations: In exchange for the high interest rate on your online savings account, you are required to do your Discover banking online or over the phone.

  • No ATM card: Discover Savings does not provide an ATM card for easy withdrawals. This could be a good thing so you're not tempted to spend your money. But if you like that convenience, look into their Money Market account instead. Or there are some other online savings accounts that come with an ATM card.

  • No Relationship Rewards: Some retail banks in the U.S. are now offering relationship bonuses to incentivize their customers to keep all of their business in one place. If you move your savings balance to Discover from your retail bank, you may miss out on some of these relationship bonuses. Contact your bank for more details.

Common Questions

If you're still interested, you probably have some questions. We'll clear up some of the basics here:

  • Should I open a CD or savings account?
    This is a really broad question and everyone has different investment goals. The decision comes down to how much you're looking to set aside, how much risk you are willing to take, and how much you'll need to access your savings.

    If you can commit to not touching your savings for at least 1 year and can meet the minimum deposit, you may be able to earn a higher interest rate with a CD versus a savings account. If you need liquidity, a savings account gives you more flexibility to withdraw your savings when needed.

  • How can I deposit funds with Discover Bank?
    For savings accounts, there are a few ways to deposit funds: deposit checks with your mobile device, transfer from Discover checking, transfer from an external account, mail a check, or set up a direct deposit to your new account. For term CDs, you can transfer from Discover checking, transfer from an external account, transfer by phone, or mail a check. For IRA CDs, contact Discover for instructions on how to fund a Discover IRA account.

  • What is the penalty for early withdrawals from Term CDs?
    It depends on the term of your CD. Here's how it breaks down:

    • Terms less than 1 year: 3 months' interest on the amount withdrawn
    • Terms from 1 year to <4 years: 6 months' interest on the amount withdrawn
    • Terms over 4 years to <5 years: 9 months' interest on the amount withdrawn
    • Terms over 5 years to <7 years: 18 months' interest on the amount withdrawn
    • Terms over 7 years and greater: 24 months' interest on the amount withdrawn

Discover Other Services

Discover offers other services, including:

  • Personal loans: Get a personal loan up to $35,000. There are no origination fees. You'll get a fixed monthly payment and there is no pre-payment penalty.

  • Student loans: Cover up to 100% of college or graduate school costs. There are no application, origination, or late fees. Choose from fixed or variable rates. See our full review.

  • Home equity loans: Borrow from $35,000 up to $150,000, with terms from 10 - 30 years. There are no application or origination fees, and no cash required at closing.

How it Compares

 Discover BankAlly Bank
 Visit SiteLearn More
 

Discover Bank

Ally Bank

SPECIAL OFFER
Online Savings Account - Earn 2.10% APY - Learn More

SPECIAL OFFER
Online Savings Account - Learn More

 

Benefits and Features

Savings2.10% APY. No monthly service fee and no minimum deposit.2.20% APY. No monthly service fee and no minimum deposit.
CD0.35% to 3.05% APY. Terms of 3 months to 10 years. 12-month CD APY of 2.50%. 5-year CD APY of 2.85%. Minimum deposit of $2,500 to open.0.75% to 2.85% APY. Terms of 3 months to 5 years. 12-month CD APY of 2.55%. No minimum deposit to open.
CheckingEarn 1% cashback on up to $3,000 in debit card purchases each month. No monthly service fee and no minimum deposit.0.10% APY under $15,000; 0.60% APY $15,000 or more. No monthly service fee and no minimum deposit. Ally will refund ATM fees for other banks up to $10 per statement cycle.
Money Market1.95% APY under $100,000; 2.00% APY $100,000 or more. No monthly service fee. $2,500 minimum deposit.0.90% APY under $25,000; 1.00% APY $25,000 or more. No monthly service fee and no minimum deposit.
Customer Service
24/7
24/7
ATMs
Over 60,000 no-fee ATMs
Over 43,000 no-fee Allpoint ATMs
Locations
Online Only
Online Only
 Visit SiteLearn More

Discover Bank: Pricing information from published website as of 6/14/2019

Ally Bank: Pricing information from published website as of 6/19/2019.

 Discover Bank
 Visit SiteLearn More
 

Discover Bank

Capital One

SPECIAL OFFER
Online Savings Account - Earn 2.10% APY - Learn More

SPECIAL OFFER
Capital One MMA - Learn More

 

Benefits and Features

Savings2.10% APY. No monthly service fee and no minimum deposit.1% APY. No monthly service fee and no minimum deposit.
CD0.35% to 3.05% APY. Terms of 3 months to 10 years. 12-month CD APY of 2.50%. 5-year CD APY of 2.85%. Minimum deposit of $2,500 to open.0.60% to 2.90% APY. Terms of 6 months to 5 years. 12-month CD APY of 2.50%. No deposit to open.
CheckingEarn 1% cashback on up to $3,000 in debit card purchases each month. No monthly service fee and no minimum deposit.0.20% APY under $50,000; 0.75% APY $50,000 or more; 1.00% APY $100,000 or more. No monthly service fee and no minimum deposit. Overdraft options prevent you from being charged when you accidentally overdraw
Money Market1.95% APY under $100,000; 2.00% APY $100,000 or more. No monthly service fee. $2,500 minimum deposit.0.85% APY up to $9,999.99; 2.00% APY $10,000 or more. No monthly service fee and no minimum deposit.
Customer Service
24/7
Mon-Sun: 8am - 11pm (ET)
ATMs
Over 60,000 no-fee ATMs
Over 39,000 no-fee Capital One & Allpoint ATMs
Locations
Online Only
Online Only
 Visit SiteLearn More

Discover Bank: Pricing information from published website as of 6/14/2019

Capital One: Pricing information from published website as of 6/14/2019.

Bottom Line

If you're ready to start building your savings, then you should consider if Discover's Online Savings Accounts or CDs are right for you.

Even if you only have $1 in savings, you can start earning interest in a high yield savings account. Or, if you have at least $2,500 set aside and aren't concerned about liquidity, you can earn an even greater return with a CD.

Discover's savings offerings might not be the right savings product for you, but if you're looking to earn interest above that of a standard savings account, opening a savings accounts or CD from Discover is an investment option worth considering.

Disclaimer: Opinions expressed here are author's alone. Please support CreditDonkey on our mission to help you make savvy decisions. Our free online service is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content.

Disclaimer: This content was first published on February 8, 2018. This content may have been updated on September 9, 2018. Information including rates, fees, terms and benefits may vary, be out of date, or not applicable to you. Information is provided without warranty. Please check the bank's website for updated information.

More from CreditDonkey:


Best Online Savings Account


Best CD Rates


How to Save $100,000

More Articles in Reviews


June
19
2019

You Invest Review

Chase You Invest App has a bonus promotion, low fees and mutual funds trading. But is it good for beginners? Read this review for the pros and cons.

    Top 10 Best Online Savings Account

    The best online savings accounts pay a good interest rate, are fully secured, and allow for flexibility. Find the best high interest savings accounts to consider.

    Top 5 Best CD Rates

    CD accounts are fully secured and risk-free. Plus, they offer higher interest rates than traditional savings accounts. Read on for our list of the best high interest CDs to help you start saving.

    Best High Yield Savings Accounts

    A high-yield savings account is a safe place to open and grow your money. Read on for the top savings accounts to earn interest.

    Best Online Bank

    An online bank can save you money on fees and pay you higher interest rates. Does it sound too good to be true? It might not be.

    Best Money Market Rates

    Money market accounts can provide higher interest rates with more account flexibility. Find the best high-yield money market accounts to consider.

    Residual Income

    Make money and get paid even after the upfront work is done. Learn how residual (or passive) income works. Here are 10 good investment ideas to build it.

    Checking Account Promotions

    View list of best checking offers for new accounts. These banks now offer huge incentives.

    Average Savings Account Interest

    The average savings account interest rate is 0.6%. Many big banks offer even lower rates. Read this for the surprising truth about savings accounts.

    Citizens Bank Student Loans Review

    If you've exhausted your federal loan options and still need money for school, private loans may help. Citizens Bank claims to offer the lowest rates and best fees in the industry.
More Articles in Reviews








About CreditDonkey®
CreditDonkey is a bank comparison website. We publish data-driven analysis to help you save money & make savvy decisions.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed on this page are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.

†Advertiser Disclosure: Many of the card offers that appear on this site are from companies from which CreditDonkey receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). CreditDonkey does not include all companies or all offers that may be available in the marketplace.

*See the card issuer's online application for details about terms and conditions. Reasonable efforts are made to maintain accurate information. However, all information is presented without warranty. When you click on the "Apply Now" button you can review the terms and conditions on the card issuer's website.

CreditDonkey does not know your individual circumstances and provides information for general educational purposes only. CreditDonkey is not a substitute for, and should not be used as, professional legal, credit or financial advice. You should consult your own professional advisors for such advice.