Updated June 28, 2021

Discover Bank Review: Pros and Cons

Read more about Discover Bank
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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
Discover Online Savings - $200 Cash Bonus

Overall Score

4.6

Savings

4.5

Checking

4.0

Money Market

4.5

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 fees 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 fees 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.

Online SavingsCashback CheckingCDs
Get StartedGet StartedGet Started
Earn cashback when you use your debit cardHigh yield savings accountSome CDs can earn a higher APY than saving accounts
No minimum depositNo minimum deposit$2,500 minimum deposit

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

Discover Bank Rates and Promotions

© CreditDonkey

Discover Online Savings - $200 Cash Bonus

To get your $150 or $200 Bonus: What to do: Apply for your first Discover Online Savings Account, online or by phone. Enter Offer Code CY21 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 to account within 30 days of account open date. Maximum bonus eligibility is $200.

What to know: 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. Eligibility is based on primary account owner. Account must be open when bonus is credited. Bonus will be credited to the account within 30 days of the account qualifying for the bonus. Bonus is interest and subject to reporting on Form 1099-INT. Offer ends 12/15/21, 11:59 PM ET. Offer may be modified or withdrawn without notice. See advertiser website for full details.

Expires 12/15/2021

Discover Online Savings - $150 Cash Bonus

To get your $150 or $200 Bonus: What to do: Apply for your first Discover Online Savings Account, online or by phone. Enter Offer Code CY21 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 to account within 30 days of account open date. Maximum bonus eligibility is $200.

What to know: 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. Eligibility is based on primary account owner. Account must be open when bonus is credited. Bonus will be credited to the account within 30 days of the account qualifying for the bonus. Bonus is interest and subject to reporting on Form 1099-INT. Offer ends 12/15/21, 11:59 PM ET. Offer may be modified or withdrawn without notice. See advertiser website for full details.

Expires 12/15/2021

Online Savings Account - Earn 0.40% APY

  • No fees
  • No minimum opening deposit
  • No minimum balance required

Online Checking Account - Earn Cash Back

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

Certificate of Deposit

  • 0.50% APY for 12-month term
  • 0.60% APY for 36-month term
  • 0.80% APY for 5-year term

Money Market Account

  • Earn 0.30% APY for balances under $100,000
  • Earn 0.35% APY for balances $100,000 and over

Discover CD Rates

  • $2,500 minimum opening deposit
  • No fees
  • FDIC insured
TermCD Rates
3 Months0.20% APY
6 Months0.25% APY
9 Months0.30% APY
1 Year0.50% APY
1.5 Years0.50% APY
2 Years0.55% APY
2.5 Years0.60% APY
3 Years0.60% APY
4 Years0.65% APY
5 Years0.80% APY
7 Years0.80% APY
10 Years0.80% APY

IRA Certificate of Deposit

  • 0.50% APY for 12-month term
  • 0.60% APY for 36-month term
  • 0.80% 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 fees, and free online bill pay.

Online Investor Savings

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:

  • 0.40% APY
  • 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.

Discover Bank
Member FDIC

Discover Online Savings - $200 Cash Bonus

To get your $150 or $200 Bonus: What to do: Apply for your first Discover Online Savings Account, online or by phone. Enter Offer Code CY21 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 to account within 30 days of account open date. Maximum bonus eligibility is $200.

What to know: 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. Eligibility is based on primary account owner. Account must be open when bonus is credited. Bonus will be credited to the account within 30 days of the account qualifying for the bonus. Bonus is interest and subject to reporting on Form 1099-INT. Offer ends 12/15/21, 11:59 PM ET. Offer may be modified or withdrawn without notice. See advertiser website for full details.

Expires 12/15/2021

Compare Savings Account Promotions

CIT Bank
Member FDIC

CIT Savings Builder - Earn 0.40% APY

Earn up to 0.40% APY. Here's how it works: Maintain a minimum balance of $25k OR make at least a $100 minimum deposit every month. Member FDIC

Axos Bank
Member FDIC

High Yield Savings

  • 0.61% APY on balance < $25,000
  • 0.25% APY on balance $25K-$100K
  • 0.15% APY on balance > $100K
  • No minimum balance requirements
  • No fees to open or maintain account
  • Free ATM card upon request
  • FDIC Insured
Quontic
Member FDIC

High Yield Savings - 0.55% APY

  • 0.55% APY
  • $100 minimum opening deposit
  • No monthly service fees

Certificate of Deposit (CD)

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: 0.20% to 0.80% APY. Terms of 3 months to 10 years. 12-month CD APY of 0.50%. 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.

Discover Bank
Member FDIC

Certificate of Deposit

  • 0.50% APY for 12-month term
  • 0.60% APY for 36-month term
  • 0.80% APY for 5-year term

Cashback Checking

Earn 1% cashback on up to $3,000 in debit card purchases each month

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

In fact, Discover Bank has no fees at all.

Discover Bank
Member FDIC

Online Checking Account - Earn Cash Back

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

Money Market

0.30% APY under $100,000; 0.35% APY $100,000 or more. $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

Discover Bank
Member FDIC

Money Market Account

  • Earn 0.30% APY for balances under $100,000
  • Earn 0.35% APY for balances $100,000 and over

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.

What Experts Say

CreditDonkey assembled a panel of industry experts to answer readers' most pressing questions:

  • What should the average person look for when choosing a bank?
  • Should people look past a bank's promotions when they are considering opening an account?
  • What advice do you have for someone who is looking to open their first bank account?

Here's what they said:

How it Compares

 Discover BankAlly Bank
 Visit SiteLearn More
 

Discover Bank

Ally Bank

SPECIAL OFFER
Discover Online Savings - $200 Cash Bonus - Learn More

SPECIAL OFFER
Online Savings Account - 0.50% APY - Learn More

 

Benefits and Features

Savings
0.40% APY
0.50% APY
CD0.20% to 0.80% APY. Terms of 3 months to 10 years. 12-month CD APY of 0.50%. Minimum deposit of $2,500 to open.0.15% to 0.80% APY. Terms of 3 months to 5 years. 12-month CD APY of 0.55%
CheckingEarn 1% cashback on up to $3,000 in debit card purchases each month0.10% APY under $15,000; 0.25% APY $15,000 or more
Money Market0.30% APY under $100,000; 0.35% APY $100,000 or more. $2,500 minimum deposit.
0.50% APY
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 and data points from published website as of 01/28/2021

Ally Bank: Pricing information from published website as of 9/18/2021.

 Discover Bank
 Visit SiteLearn More
 

Discover Bank

Capital One

SPECIAL OFFER
Discover Online Savings - $200 Cash Bonus - Learn More

SPECIAL OFFER
Personal Checking Account - $100 Bonus - Learn More

 

Benefits and Features

Savings
0.40% APY
0.40% APY
CD0.20% to 0.80% APY. Terms of 3 months to 10 years. 12-month CD APY of 0.50%. Minimum deposit of $2,500 to open.0.10% to 0.80% APY. Terms of 6 months to 5 years. 12-month CD APY of 0.20%
CheckingEarn 1% cashback on up to $3,000 in debit card purchases each month
0.10% APY
Customer Service
24/7
Mon-Sun: 8am - 11pm (ET)
ATMs
Over 60,000 no-fee ATMs
Over 40,000 no-fee Capital One & Allpoint ATMs
IRA CD12-month CD APY of 0.50%. 24-month CD APY of 0.55%. 5-year CD APY of 0.80%.0.10% to 0.80% APY. Terms of 6 months to 5 years. 12-month CD APY of 0.20%.
Locations
Online Only
Online Only
 Visit SiteLearn More

Discover Bank: Pricing information and data points from published website as of 01/28/2021

Capital One: Pricing information from published website as of 9/15/2021.

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.

Discover Bank
Member FDIC

Discover Online Savings - $200 Cash Bonus

To get your $150 or $200 Bonus: What to do: Apply for your first Discover Online Savings Account, online or by phone. Enter Offer Code CY21 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 to account within 30 days of account open date. Maximum bonus eligibility is $200.

What to know: 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. Eligibility is based on primary account owner. Account must be open when bonus is credited. Bonus will be credited to the account within 30 days of the account qualifying for the bonus. Bonus is interest and subject to reporting on Form 1099-INT. Offer ends 12/15/21, 11:59 PM ET. Offer may be modified or withdrawn without notice. See advertiser website for full details.

Expires 12/15/2021
Chase
Member FDIC

Chase Total Checking® - $225 Bonus

  • New Chase customers enjoy a $225 bonus when you open a new Chase Total Checking® account and set up direct deposit
  • Access to 16,000 Chase ATMs and more than 4,700 branches
  • Chase Mobile® app - Manage your accounts, deposit checks, transfer money and more -- all from your device.
  • Open your account online now
  • Available online nationwide except in Alaska, Hawaii and Puerto Rico. For branch locations, visit locator.chase.com.
CIT Bank
Member FDIC

CIT Bank Money Market Account - 0.45% APY

  • 0.45% APY
  • $100 minimum opening deposit
  • No monthly maintenance fee
HSBC Bank
Member FDIC

HSBC Premier Checking - $450 Welcome Deposit

Expires 1/5/2022
  • Get a $450 Welcome Deposit for eligible new customers who open a new HSBC Premier checking account and complete the following qualifying activities.
  • Open your new HSBC Premier checking account online by January 5, 2022; and
  • Make recurring monthly Qualifying Direct Deposits totaling at least $5,000 from a third party to your HSBC Premier checking account(s) for 3 consecutive calendar months from the second full calendar month after account opening.
  • You will automatically receive the $450 Welcome Deposit in your new HSBC Premier checking account approximately eight weeks after completing all qualifying activities. It's that simple.
  • Deposit products are offered in the U.S. by HSBC Bank USA, N.A. Member FDIC.
TD Bank
Member FDIC

TD Beyond Checking - $300 Cash Bonus

  • New customers who apply online for a TD Beyond Checking account can earn a $300 cash bonus after receiving direct deposits of $2,500 or more within 60 days. To qualify for this offer, you must be a U.S. resident and apply for the offer online. Offer is available in these states: CT, DC, DE, FL, MD, ME, MA, NC, NH, NJ, NY, PA, RI, SC, VT, VA
  • Earn $300 when you receive direct deposits totaling $2,500 or more within 60 days
  • Get more from your checking account. With TD Beyond Checking with Payback Plus, you'll earn interest and get reimbursed for non-TD ATM transactions, Rush Bill Payments and more.
  • Monthly maintenance fee waived when you receive monthly direct deposits of $5,000 or more, or maintain a minimum daily balance of $2,500, or a combined balance of $25,000 across eligible TD accounts.
  • TD fees waived at any ATM and non-TD fees reimbursed when you keep at least a $2,500 daily balance
  • Overdraft Payback - Get overdraft fees automatically reversed up to two times a year.
  • Get your money where it needs to go —fast— with Rush Bill Payments, Send Money with Zelle®, incoming wires and a reimbursement for one outgoing wire (domestic or international) per statement cycle.
  • TD checking accounts come with an instant-issue debit card. And, you can pay with confidence with Zero Liability protection and 24/7 fraud monitoring.
  • Monthly maintenance fee waived on one TD Simple Checking℠ account and any Savings and Money Market accounts. Plus, get free standard check orders, money orders, official bank checks and stop payments.

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Note: This website 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. You do not have to use our links, but you help support CreditDonkey if you do.

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About Discover Bank

Discover Bank offers some of the highest interest rates for its savings account. In addition, Discover offers cashback checking. There are no fees for checking and savings accounts.

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.

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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.

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