In 2000, the well-known credit card firm Discover launched Discover Bank. These days, the bank operates primarily online. Along with no-fee bank accounts and excellent mobile support, Discover Bank offers higher-than-average interest rates and unique options, like cash back on debit purchases. Compared to traditional banking institutions, however, Discover Bank lacks variety in checking and savings accounts, making it ideal for customers who want straightforward, no-fee accounts, but less useful for clients with specific checking, savings or investment needs.
Discover Bank at a glance
|Bank||Min Savings Deposit||Max Savings APY||1-Year CD Rate||J.D. Power Survey Score||Key Benefit|
|Discover Bank||$0||1.70%||2.00%||860 out of 1,000 in overall customer satisfaction||High interest, no fee accounts with awesome online access|
What we like about it
Discover makes saving and investing simple, and offers solid interest rates, no-fee accounts and cash-back options. The bank’s mobile app also streamlines the process of money transfers and check deposits.
Things to consider
With only one physical branch, the vast majority of Discover customers can’t get help face-to-face. While Discover Bank’s online and phone support are above average, some customers still prefer brick-and-mortar locations for more complex investment or loan transactions.
Discover checking accounts
Discover Bank offers one checking account: Cashback Debit. It’s an online checking account that offers 1% cash back on eligible debit purchases up to $3,000 per month. It requires no monthly actions or balances to remain active and includes free online bill payments and check ordering.
The account doesn’t have fees for monthly maintenance, either, and customers can benefit from Discover’s policies on in-network ATM withdrawals, debit card replacements, standard check orders, stop-payment orders, insufficient funds or account closures.
Discover savings accounts
Discover’s Online Savings Account comes with above-average interest, which is compounded daily and paid into your account each month. It requires a $0 minimum opening deposit and there is no monthly fee, either. As with Discover Bank’s checking account, there are no fees for monthly maintenance, returned deposit items, stop-payment orders or account closures.
You can also deposit checks with Discover Bank’s mobile app by simply taking a photo of the check and indicating the destination account. Have both a Discover checking and savings account? Well, you can easily transfer money between them in the app.
Discover money market accounts
The money market account from Discover Bank features above-average interest rates — 1.55% APY — which increase slightly to 1.60% APY if your account has over $100,000 in it. These accounts provide easy access to cash via the bank’s 60,000 in-network ATMs, and also feature no fees for official bank checks, standard checks, excessive withdrawals or minimum balances.
It’s also possible to freeze your money market debit card if you misplace it. To do this, simply use the Discover Bank mobile app to temporarily disable your card until you find it — or have a new debit card mailed out at no charge.
Discover certificates of deposit (CDs)
Discover Bank’s CD accounts offer terms ranging from 3 months to 10 years, along with the ability to “ladder” CDs with differing maturity rates. While rates under one year are on par with other online banks, CDs with terms of one year or longer offer above-average interest rates. There are no fees for Discover Bank CDs.
There are penalties for cashing in CDs early, though. Terms of less than 1 year incur a penalty of 3 months’ simple interest. Terms between 1 and 4 years face a penalty of 6 months’ simple interest. Terms of 4 to 5 years are 9 months’ simple interest, while penalties for early withdrawal on CD terms of 5 to 7 years are 18 months’ and 7 to 10 years are 24 months of simple interest.
Discover IRA accounts
Both traditional and Roth IRAs are offered by Discover Bank for 12-month, 24-month and 5-year terms. Roth IRAs are funded with after-tax dollars, earnings are tax-free and your contributions are not tax-deductible — but you can withdraw anytime without penalty.
Traditional IRAs are funded with pre-tax dollars and earnings are tax-deferred, but the money can’t be withdrawn until you’re 59 and a half. You can easily check in on the status of your IRAs with Discover Bank’s mobile application.
Discover credit cards
Not surprisingly, Discover Bank offers a host of credit card options, including:
- Discover it® Cash Back: Get 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com and more up to the quarterly maximum, each time you activate. Plus, earn unlimited 1% cash back on all other purchases. In addition, Discover will match the cash back you earn in at the end of the first year, with no limitations on the total amount.
- Discover it® Miles: The card earns unlimited 1.5x miles on all purchases, plus matching all miles earned at the end of your first year.
- Discover it® Secured: Designed to help build your credit rating, this card requires a refundable security deposit (of at least $200 after being approved) and has a higher-than-average interest rate. Furthermore, the card offers 2% cash back on gas station and restaurant purchases (up to $1,000 in combined purchases every quarter, automatically) and 1% cash back on all other purchases, along with automatic cash back matching at the end of your first year.
Discover Bank doesn’t offer any dedicated investment portfolios or products. Instead, the firm points customers to its combination of high-yield savings, money-market and CD options. If you’re looking for an online bank with more diversified investment options, consider Ally; their investment options include self-directed or managed portfolio trading across stocks, ETFs, bonds, mutual funds and margin accounts.
The bottom line
Discover Bank offers no-fee accounts with better-than-average interest rates. Customers can easily deposit and withdraw money at over 60,000 in-network ATMs and enjoy great benefits with the company’s substantial credit card lineup. If you’re looking for easy banking options with no hidden fees and decent interest, Discover Bank is a good choice. If you prefer to do at least some of your banking in person, this online option isn’t your best fit.
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