An In-Depth Review of Discover’s Banking Products
Posted May 17, 2018 5:19 p.m. EDT
Updated August 7, 2018 6:00 p.m. EDT
APY | Account Type | Account Name | Compare Rates from Similar Accounts | ||
|---|---|---|---|---|---|
1.75% | Savings | Discover Bank Online Savings | 1.85% | Synchrony Bank High Yield Savings | on Synchrony Bank’s secure website |
2.25% | CD Rates | Discover Bank 12 Month CD | 2.50% | CIT Bank 1-Year Term CD | on CIT Bank’s secure website |
2.50% | CD Rates | Discover Bank 3 Year CD | 2.55% | Ally Bank High Yield 3 Year CD | on Ally Bank’s secure website |
2.85% | CD Rates | Discover Bank 5 Year CD | 3.00% | Barclays 60 Month Online CD | on Barclays’s secure website |
In this review, we’ll cover:
Discover’s CD Rates
Discover’s Savings Account
Discover’s Checking Account
Discover’s Money Market Account
Discover IRA CD Rates
Overall Review
Discover Bank’s CD Rates
A minimum deposit of $2,500 gives you competitive CD rates among online banks, but higher rates can be found.[Chart-DiscoverBankCdRates]CD term | Annual Percentage Yield (APY) |
|---|---|
3 months | 0.35% |
6 months | 0.65% |
9 months | 0.70% |
12 months | 2.25% |
18 months | 2.35% |
24 months | 2.45% |
30 months | 2.45% |
3 years | 2.50% |
4 years | 2.60% |
5 years | 2.85% |
7 years | 2.90% |
10 years | 2.95% |
- Minimum opening deposit: $2,500
- Early withdrawal penalty:
- For CDs that are less than one year, the penalty will be worth 3 months of simple interest.
- For 1-3 year CDs, the penalty is 6 months of simple interest.
- For a 4 year CD, the penalty is 9 months of simple interest.
- For a 5 year CD, the penalty is 18 months of simple interest.
- For 7-10 year CDs, the penalty is 24 months of simple interest.
Discover Bank offers certificates of deposits with terms ranging from three months to 10 years. Interest is compounded daily and is deposited every month. As with most CD rates, the longer the term of the CD, the higher the rate you will receive. To make sure you lock in the highest possible rate for your CD, make sure you fund your account within ten days of application.
There are early withdrawal penalties for taking your money out before the end of the term. The penalty amount varies depending on how far you are into your CDs term.
While there are penalties for withdrawing your money early, you do have the option to withdraw any interest earned on your CD to a Discover bank account without penalty. This money can also be left in your CD to compound throughout the life of your CD. Account holders receive notice of CD maturity 30 days prior to the end of the term. Once a term has ended, account holders have a 9-day grace period to make a change to their CD before incurring penalties. If no action is taken, Discover CDs will automatically renew at the same rate and term.
You can open a Discover CD online or by phone. The only eligibility requirements come in the form the $2,500 minimum deposit, which can be paid via phone, check or an online transfer from your bank. Discover provides the option of opening your CD in the form of a Trust, Guardian, Estate or Custodial account, but in order to do so, you must call one of their Banking Specialists.
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magnifying glassHow Discover Bank’s CD rates compare
Overall, Discover Bank CD rates are competitive. They certainly beat out most of the major banks by far when it comes to APY. However, if you do some digging, there are better rates out there for CDs, both in terms of minimum deposit and interest rate earned.
Discover’s minimum deposit of $2,500 is the biggest downside to this product. While it’s not common for banks to offer no-fee withdrawals on CDs, there are some out there. To find the most competitive CD rates on the market right now, check out our Best CD Rates page.
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Discover Online Savings account
A completely fee-free online savings account, with no minimum balance requirements, and competitive interest rates.[Chart-DiscoverOnlineSavingsAccount]APY | Minimum Balance Amount |
|---|---|
1.75% | $0 |
- Minimum opening deposit: $0
- Monthly account maintenance fee: $0
- ATM fee: None as long you use an ATM within Discover’s network.
- ATM fee refund: None.
- Overdraft fee: None.
There is no minimum balance to open a Discover Online Savings account, nor do they charge any monthly maintenance fees. While account holders do not have the ability to withdraw money from their savings account via an ATM, they are able to access and manage their savings account via Discover’s online banking and mobile app.
The online banking and mobile app lets users deposit and transfer money to both Discover Bank and non-Discover bank accounts. However, you’ll get hit with a $30 fee for an outgoing wire transfer, as well as a $15 charge per item for exceeding the Federal Reserve’s Regulation D limitation of six withdrawals or transfers in one calendar month. Overdrafting your online savings account results in a $30 fee, which you can avoid by signing up for overdraft protection.
Currently, you can earn a competitive interest rate of 1.55% APY on a Discover Online Savings account. This is compounded daily and deposited into your savings account every month. As soon as you deposit money in your account, you’ll begin earning interest.
This is a solid savings account for anyone who already has a checking account with Discover, has a substantial amount of savings, or wants to earn a competitive interest rate on their savings account. It stands out for being fee-free and requiring no minimum balance or deposit, but falls short when compared with all the current interest rates out there.
There are no eligibility requirements to open a Discover Online Savings account since they do not require an initial minimum deposit or any minimum balance. Opening an account can be done online or by phone.
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magnifying glassHow Discover Bank’s savings account compares
Compared with other online savings accounts, Discover Bank does not have the best offerings. That’s not to say it’s bad. Next to what major banks are currently offering, this account is a major win. However, with a little research, you can find better interest rates out there that don’t charge fees or have minimum balance requirements.
To see what other rates and offers are out there that fit your savings goals check out our Best Online Savings Account Guide.
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Discover Bank’s CashBack Checking Account
If you use your debit card often, Discover CashBack Checking offers no monthly fees and pays decent cashback rewards.- Monthly account maintenance fee: None.
- ATM fee: None as long as the ATM is within Discover’s network.
- ATM fee refund: None.
- Overdraft fee: None.
Discover Bank’s CashBack Checking account is appealing because it carries very few fees — that means no monthly maintenance fee, no minimum balance requirements and no fees for check ordering or debit card replacement.
They offer free online and mobile banking options like bill-pay, wire transfers and account management.
One of the account’s main selling points is the cashback reward, which pays 1.00% on debit card transactions up to $3,000 on purchases each month. In other words, if you spend up to $3,000 in a month you receive $30 cash back. This 1.00% return is not an interest rate, but rather a cashback reward. There are no qualifications to earn the cashback rewards — when you spend with your debit card, you’re earning rewards. These rewards can be redeemed as a credit to your checking account or transferred to a Discover CashBack Bonus card account.
Discover recently partnered with AllPoint and MoneyPass to increase their in-network ATM locations by 60,000+. While Discover does not charge ATM fees for going out-of-network, they do not reimburse ATM fees incurred by third-party ATMs.
One of the few fees you’ll find is an overdraft fee. Their overdraft fee is $30 per transaction, which is on par with other financial institutions. You can avoid an overdraft fee by opting in to overdraft protection, which requires account holders to link their checking account with a Discover savings account.
Since Discover Bank is considered an online bank, you must open your account online via their website or by phone. There are no minimum deposit requirements, nor do they require account holders to keep a minimum balance. Once you open your account, you’ll receive your debit card within 10 business days. Discover offers free checks for their CashBack Checking Account, although you must request them.
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magnifying glassHow Discover Bank’s checking account compares
Discover Bank’s CashBack Checking stacks up against other banks when it comes to offering a no-fee checking account. While they do boast a large ATM network, in part to their partnerships, they still do not reimburse out-of-network ATM fees. When it comes to rewards, their cashback reward is decent.
There are better cashback rewards programs out there, as well as, accounts that don’t require you to spend money to make money. If you spend a significant amount money via your debit card every month, this rewards program might make sense. If not, there are other banks that currently offer better rates on checking accounts for less effort on your end.
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Discover Bank’s Money Market Account
Good withdrawal options, but with a high minimum balance requirement and interest rates that don’t stack up.[Chart-DiscoverBanksMoneyMarketAccount]APY | Minimum Balance Amount |
|---|---|
1.60% | Less than $100,000 |
1.65% | Greater than $100,000 |
- Minimum opening deposit: $2,500
- Monthly account maintenance fee: None
- ATM fee: None, but only if you use an ATM within Discover Bank’s network.
- ATM fee refund: None.
- Overdraft fee: None.
Opening a money market account with Discover Bank requires a minimum initial deposit of $2,500. While their money market accounts don’t charge any monthly maintenance fees, account holders must maintain a minimum balance of $2,500 to avoid a $10 fee. They don’t even beat out Discover’s saving account rates.
There are a few account features worth noting, starting with the withdrawal options. Unlike the Discover Online Savings account, account holders will receive checks and a free debit card. Your debit card can be used to withdraw money via ATMs and at stores.
Discover Bank does not charge ATM fees, however if you use an out-of-network ATM they will not reimburse the fee. It’s important to note, that your money market account is subject to the same Federal Reserve regulations limiting transfer and withdrawals to six per month. If you exceed the six withdrawals you’ll be charged a $15 fee per item; however this does not apply to withdrawals from ATMs or via official check that is mailed to you. Discover Money Market accounts also give you the ability to sign up for online bill pay, as well as, overdraft protection.
The only eligibility requirements to open a Discover Money Market account is an initial minimum deposit of $2,500. You can open an account either online or by calling one of their Banking Specialists. To fund your account, you have the option of an online transfer, direct deposit or check, which can be mailed or deposited via Discover Bank’s Mobile Check Deposit app.
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magnifying glassHow Discover Bank’s money market account compares
Looking at the overall market offerings, Discover Bank Money Market accounts do not stack up. Their competitive account features like a large ATM network, free checks and a debit card are nice, but their rates do not compete.
You can find other banks offering lower deposit requirements, as well as better rates. To see how this account compares, check out MagnifyMoney’s Best Money Market Rates guide.
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Discover IRA CD rates
Competitive rates with a higher-than-average minimum deposit for both traditional and Roth options.[Chart-DiscoverIRACDRates]Term | APY |
|---|---|
3 Months | 0.35% |
6 Months | 0.65% |
9 Months | 0.70% |
12 Months | 2.10% |
18 Months | 2.15% |
24 Months | 2.20% |
30 Months | 2.20% |
3 Years | 2.35% |
4 Years | 2.50% |
5 Years | 2.60% |
7 Years | 2.65% |
10 Years | 2.70% |
- Minimum opening deposit: $2,500
- Early withdrawal penalty:
- For CDs that are less than one year, the penalty will be worth 3 months of simple interest.
- For 1-3 year CDs, the penalty is 6 months of simple interest.
- For a 4 year CD, the penalty is 9 months of simple interest.
- For a 5 year CD, the penalty is 18 months of simple interest.
- For 7-10 year CDs, the penalty is 24 months of simple interest.
Similar to other Discover Bank CD products, the minimum deposit to open an IRA CD is $2,500. This is also the minimum balance required to earn your interest rate. They offer both Traditional and Roth IRA CD options, with interest rates that vary depending on the CD term you choose. Terms can be as short as 3 months to up to 10 years. Their early withdrawal penalties remain the same for both IRA and non-IRA CDs.
An IRA CD is a worthwhile investment if you aren’t touching your savings and want to earn a higher APY than what’s being offered for your savings account. IRA CDs make the most sense if you’re looking for a long-term investment. While they don’t pay crazy high returns, if you have extra capital, it’s a good investment vehicle to have in your portfolio.
Opening an IRA CD account with Discover Bank can be done by phone or online, and requires an initial minimum deposit of $2,500. Funding your account can be done by phone, via check or via a bank-to-bank transfer from an existing IRA. Discover also allows account holders to initiate a direct or indirect rollover from an existing IRA.
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magnifying glassHow Discover Bank’s IRA CD compares
Compared with other IRA CD’s out there, Discover Bank’s rates fall somewhere in the middle. The minimum deposit is higher than other offerings out there and the rates are competitive, but not high enough to be the best on the market.
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Overall review of Discover Bank’s deposit products
Discover has created a suite of banking products that can compete in today’s market. Their online and mobile banking has all the necessary features to access and manage your account, and they boast a large ATM network that limits, but does not completely remove, ATM fees from your life.
Compared with the traditional big banks, Discover Bank has them beat when it comes to rates and offerings. However, if you take the entire market into consideration, adding in online banks, community banks and credit unions, Discover banking products fall somewhere in the middle.
Based on the fact that all of the reviewed products above do not have monthly maintenance fees attached to them and pay some form of interest or cash back, means you aren’t going to be wrong by opening an account. However, if you’re looking for the best of the best, Discover Bank is not quite there yet.
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The post An In-Depth Review of Discover’s Banking Products appeared first on MagnifyMoney.
