Discover Card may be the fourth largest credit card brand in the U.S., behind Visa, MasterCard and American Express, but did you know that Discover actually does more than just offer credit cards – and offers online savings in addition to other helpful financial products?
In fact, Discover Bank provides online home banking products such as checking, savings, money market, certificates of deposit, and IRAs.
Furthermore, Discover Bank currently offers a higher than average annual percentage yield (APY) on their online savings account, at 0.40% – which has consumers eager to combine their credit card and banking services to make spending (and saving) money that much easier.
What is a Discover Online Savings Account?
Discover Bank’s savings account is a fully-online account, and as with any online bank, Discover avoids overhead costs associated with maintaining physical branches thus transferring those savings on to you. The Discover Online Savings Account currently offers a 0.40% APY, with no maintenance fees, no monthly minimums and no minimum opening deposit required. Although, if you want to take advantage of their $150 or $200 bonus promotion, you will need to initially deposit $15,000 or $25,000, respectively. Interest in the Discover online savings account is compounded daily and paid out on a monthly basis. Discover Bank is also FDIC-insured, so you can feel free to enjoy online convenience and their higher than average APY, while receiving a safe and secure way to save money.
What are the Account Fees for a Discover Online Savings Account?
Discover is up front about all of the costs and fees associated with their accounts. Furthermore, they state on their website that, “Our online savings account has first fee forgiveness and no hidden fees.” That said, they want their customers to know what they are signing up for.
Here is the current fee schedule for Discover’s Online Savings Accounts:
|Monthly maintenance fee||$0.00|
|Minimum balance fee||$0.00|
|Official bank check||$0.00|
|Expedited delivery of official bank check||$0.00|
|Incoming wire transfers||$0.00|
|Deposited item returned||$0.00/ item|
|Excessive withdrawal fee||$15.00/item|
|Stop payment order for 6 months||$15.00|
|Insufficient funds (1 fee max per day)||$30.00|
|Outgoing wire transfers||$30.00|
What Are The Benefits of a Discover Online Savings Account?
In this section, we’ll review what current customers most commonly say are the advantages to their Discover Savings account.
- Higher than average APY
- No maintenance fees or minimum deposit required to open the account
- Access to your account any time via online or mobile banking
- Easy to electronically deposit checks, make free electronic transfers, and bill pay
- 24/7 U.S.-based customer support
- First fee forgiveness
- Interest compounded daily and paid monthly
- Auto-Save transfer feature
- Up to $200 cash bonus
What Are The Disadvantages of a Discover Online Savings Account?
In this section, we’ll review what current customers most commonly say are the disadvantages to their Discover Savings account.
- Discover’s savings accounts are online only – although there is 1 branch located in Delaware if you need to speak in-person with someone about your account.
- The cash bonus is considered interest and will be reported on IRS Form 1099-INT. Offer may be modified/withdrawn without notice.
- Limited deposit options. The only ways to deposit money into a Discover Savings Account are from direct deposits, online transfer, mobile check deposits or mail. You can’t deposit cash or traveler’s checks.
- Fee for exceeding transactions. Federal regulations limit your monthly withdrawals to (6), and Discover will charge you $15 every time you go over that limit.
And, although 0.40% APY is one of the best ones you will find in the current market, there are some competitors with higher.
As of October 2021, here are some rates from competitors that you may want to check out:
- Aspiration Bank – 1.00% APY
- CIBC Bank – 0.52% APY
- Vio Bank – 0.51% APY
- Ally Bank – 0.50% APY
- Citi Accelerate – 0.50% APY
- First Foundation Bank Online Savings – 0.50% APY
- Goldman Sachs – Marcus Account – 0.50% APY
- Synchrony Bank – 0.50% APY
- TAB Bank – 0.50% APY
- TIAA Bank – 0.50% APY
- American Express Personal Savings – 0.40% APY
- Barclays Bank – 0.40% APY
- Capital One 360 Performance Savings – 0.40% APY
- CIT Bank Savings Builder – 0.40% APY
- Citizens Access – 0.40% APY
- Discover – 0.40% APY
- MySavingsDirect – 0.25% APY
- HSBC Direct – 0.15% APY
Is A Discover Online Savings Account FDIC-Insured?
Yes. Discover Bank is a FDIC member, which means that funds deposited in a Discover Savings Account are insured up to the maximum allowed by law.
The Federal Deposit Insurance Corporation (FDIC) is a United States government corporation providing deposit insurance to depositors in U.S. commercial banks and savings institutions. The FDIC insures deposits according to ownership category (such as individual, joint or accounts with beneficiaries). The current maximum amount is $250,000 per depositor, per insured bank, for each account ownership category.
How Do You Open A Discover Online Savings Account?
The application process for a Discover Online Savings account usually takes the average member 5-10 minutes to complete online. In other words, it’s fairly easy to get set up!
Next, click “Open an account” to be redirected to the Account Application
Then, fill out your personal details
Finally, fund your account. Since there’s no minimum opening deposit required, you don’t need to do this immediately. When you’re ready, you can start depositing money into your new savings account.
That’s it! Once your account is active, you can log on any time 24/ 7 to deposit and withdraw funds or make changes. You can also set up automatic deposits into your account to effortlessly build your savings.
How To Access Your Discover Online Savings Account:
Online: Access your account by logging in with your username and password on: https://discover.com
Mobile Device: Bank on your phone/tablet through their mobile app.
Phone: You can call Discover at the following phone numbers 24/7:
PO Box 30416
Salt Lake City, UT 84130
In conclusion, Discover’s Online Savings Account offers a competitive APY at 0.40% – and right now has the added bonus of cashback – which is a great way to earn some extra money on your cash balances for simply opening an online savings account. The lack of physical branches and limited deposit options may have traditional bank members shutter at the inability to speak to someone in person about their account and deposit cash – but in the mobile world we live in today, Discover’s online account and their 24/7 U.S.-based customer support should put minds at ease and make banking (and saving) as stress-free and user-friendly as it can be.
Banking Health Score
There are many banks and financial institutions to choose from and it is important to be able to distinguish the good from the bad. Our team reviews each bank on a monthly basis to ensure that the information we share is as up to date as possible. Not only is the financial strength of a company important, but also how well their customer service is rated by actual customers like you.
We also believe that in order to determine how well a bank is functioning, that several sources should be utilized to compare one bank to another.
That said, here is a list of scores from trusted sources that you should consider before making your banking decisions.
Discover – Bank Health Scores
Bank Professor’s Bank Score = ⭐⭐⭐⭐⭐ 5 stars out of 5 stars
- Bankrate’s Safe and Sound Rating: 4.1 out of 5 stars
- BauerFinancial Star Rating: 4 out of 5 stars
- BankTracker Troubled Asset Ratio: 0.53
- FDIC: Actively insured
More about the rating system:
- BankProfessor rates banks monthly on a one-to-five scale based on revenue, net income, total assets, total equity, capital ratio, customer reviews, rating agency scores, profitability, and troubled asset ratio.
- Bankrate.com ranks banks and credit unions quarterly on a one- to five-star system, with one being the lowest rating and five the highest. The rating is given based on regulatory filings about the financial institution’s capital adequacy, asset quality, profitability and level of cash available. It compares those levels with peer and industry norms.
- BauerFinancial offers a similar star rating system as Bankrate (a one- to five-star system, with one being the lowest rating and five the highest).
- BankTracker was created by the Investigative Reporting Workshop of American University and MSNBC.com. They determine a bank’s troubled asset ratio. According to the site, the ratio is “a strong indicator of severe stress inside a bank because it shows the bank’s ability to withstand loan losses”. In other words, the higher the ratio, the more “trouble” they are in.
How to Close A Discover Savings Account
If you wish to close your online savings account with Discover, you will first need to make sure that all pending transactions have cleared before you start transferring any money out of the account. Then, you can contact the bank at 1-800-347-7000 or send correspondence via mail to Discover Bank PO Box 30417 Salt Lake City, UT 84130 to request account closure.
You can also login to your account online and send a secure message to Discover’s customer service department to request account closure.
Typically account closure requests will need to be made in writing (even if you call first). When you speak with a customer service representative, make sure to ask if they prefer written requests to be received via standard mail, e-mail or fax.
You should receive a response or confirmation of account closure within a few business days.
The predecessor to Discover Bank – The Greenwood Trust Company (owned by Sears Department Stores) – was founded in 1911 in Delaware. Then, Discover acquired The Greenwood Trust Company in 1985. As a result of the acquisition, leaders eventually renamed it Discover Bank in 2000. Discover Bank, which is owned and operated by Discover Financial Services, offers credit cards, personal loans, home equity loans, student loans, as well as checking and savings accounts. It’s business is mainly online but has one operating branch located in Greenwood, Delaware. Their mission is, “… to help people spend smarter, manage debt better and save more so they achieve a brighter financial future.”