Discover is well known for its credit cards. But it’s also a bank and payment services company with a variety of products and services. Since its inception in 1911, Discover has become one of the largest financial institutions in the U.S. While Discover Bank is an online-only bank with only one physical branch in Delaware, customers can access their accounts online or via the Discover app.
Just like other full-service banks, Discover offers deposit accounts like checking accounts and savings accounts, credit cards, personal loans, and student loans. To help you decide if Discover Bank is good for your unique needs, we’ve compiled this Discover Bank review.
The Experience
Discover Bank operates online and has more than 60,000 fee-free ATMs across the nation. There’s also a highly rated mobile app you can download on your iOS or Android device to manage your accounts. If you have a question or concern, you can reach out to Discover’s bank customer service representatives via phone 24/7.
Discover Bank Deposit Accounts
Here’s an overview of the various deposit accounts available at Discover Bank. The right one for you depends on your unique financial goals.
Discover Cashback Debit Checking
Discover Bank offers the Discover Cashback Debit, which stands out among other checking accounts you may have come across. As a Discover debit cardholder, you can earn 1% cash back on up to $3,000 in debit card purchases each month. If you take advantage of this every month, you can earn $360 cash back in a year without much effort.
In addition, the Discover rewards checking account is free of monthly fees, annual fees, check fees, in network ATM fees, and replacement debit card fees. Plus, there is no minimum balance requirement, so you can keep as much or as little as you’d like in your account with the bank cashback debit.
Savings
With the Discover Bank Online Savings Account, you can earn an attractive 4.00% annual percentage yield or APY. Your interest will compound daily and pay out on a monthly basis. Best of all, there are no monthly service fees or minimum balance requirements, as with the checking account. Whether you need a place to park your emergency fund or save for other financial goals, the Discover savings account can be a good fit.
Money Market
For a versatile account that allows you to save money and earn interest as well as use a debit card and write checks, Discover’s money market account may be worthwhile. You’ll get a competitive interest rate and a debit card, check writing capabilities, and ATM access.
The annual percentage yield APY you earn will depend on how much money you keep in the account. The highest interest savings account rates are reserved for balances $100,000 and over. Discover’s money market accounts are also fee-free, so you won’t have to worry about monthly maintenance fees or annual fees.
Certificates of Deposit (CDs)
Discover CDs might be a solid pick if you like the idea of guaranteed returns. Its rates are competitive and terms range from three months to 10 years. If you do decide to open a CD with Discover Bank, you will need to make a $2,500 minimum deposit to open it.
For a high interest rate, you’ll need to choose a longer term. Additionally, you’ll have to keep your money in the Discover Bank CD until its term is up, unless you don’t mind paying an early withdrawal penalty.
IRA Certificates of Deposit (CDs)
In addition to standard CDs, Discover offers IRA CDs. Discover IRA CDs come in two forms: Traditional IRA CDs and Roth IRA CDs. Any contributions you make to a Roth IRA CD aren’t tax-deductible. But when it comes time to withdraw funds, you won’t have to pay any taxes.
Traditional IRAs, on the other hand, are the opposite. You’ll fund them with pre-tax money and enjoy tax-deferred earnings. If you withdraw the funds, at age 59.5 without penalty, you will be on the hook for taxes.
Other Discover Bank Offerings
While many people appreciate Discover Bank’s deposit account, they also turn to the bank for credit cards and loans. Here are some details on these products.
Discover Credit Cards
Discover understands that credit cards are not one size fits all. That’s why the bank offers a variety of credit cards to meet various spending habits and financial needs. Most of these cards offer rewards and no annual fee or small annual fees.
Discover’s current lineup of credit cards includes Discover it® Cash Back, Discover it® Student Cash Back, Discover it® Miles, Discover it® chrome, Discover it® Student chrome, Discover it® Secured Credit Card and the NHL® Discover it®. The right Discover credit card depends on your unique situation.
Discover Loans
With Discover loans, you can buy a house, go to college, fund a home improvement project, and meet a number of other financial goals. Discover’s lending products include unsecured personal loans, student loans, home equity loans, and mortgage refinancing.
The interest rates you receive will depend on factors like your credit score, income, debt, loan purpose and borrowing amount. You can find a loan amount calculator plus a rate and payment calculator on the Discover website and calculate potential payments beforehand.
Discover Mobile App
Discover Mobile makes it easy for you to access and manage your financial accounts. You can log in via touch ID or face ID if you have an iPhone or iPad. The Quick View feature can be helpful if you’d like to view your account balances without logging into your account. You may also deposit checks with the mobile check deposit feature or locate in network ATMs through the ATM locator.
Discover Bank Fees
Most banks, especially those with brick and mortar locations, charge fees, like monthly maintenance fees, annual fees, and inactivity fees. These fees can eat into your savings and make it more difficult to meet your financial goals. Since Discover is a digital bank with low overhead costs, its fees are low.
As a Discover customer, you won’t have to pay monthly maintenance fees, insufficient funds fees, excess withdrawal fees, overdraft fees, online bill pay fees, and incoming wire online transfer fees. You will, however, be charged $30 for any outgoing wire transfers. In addition, Discover credit cards come with late payment fees and returned payment fees.
Who should bank with Discover?
Discover offers a plethora of deposit accounts and other products that may be right for you. It’s a particularly good option if you want to lock in high interest rates on savings accounts and appreciate few fees.
Additionally, if you use your debit card often and like the idea of earning rewards on it with the cashback debit account, Discover can be a great option. If you prefer an in-person banking experience and are looking for small business products, you’ll need to look elsewhere.
Alternatives to Discover Bank
If you’re looking for an online bank but determine that Discover Bank isn’t a good fit, there are many other options at your disposal, such as:
Ally Bank
Just like Discover Bank, Ally Bank is a popular online bank that offers a savings account with an impressive APY and no minimum deposit requirement. Plus, it’s part of the Allpoint ATM Network and offers access to more than 43,000 ATMs across the U.S. Its savings brackets can help you meet various goals.
American Express
American Express is similar to Discover Bank in that this financial institution is also known for its credit cards. If you have an American Express credit card, you can open a high APY checking account with American Express and earn Membership Rewards points on certain purchases.
Chime
While Chime isn’t technically an online bank like Discover Bank, it’s a financial technology or fintech company with similar banking services. In addition to the Chime checking account with no minimum balance requirements or monthly maintenance fees, Chime offers other perks like early direct deposit and automated savings tools.
Bread Savings
Formerly Comenity Direct, Bread Savings is an online bank with similar offerings to Discover Bank. Its high yield savings account comes with a competitive APY and no monthly maintenance fee. Its lineup of CDs also have high rates and terms ranging from one to five years.
Barclays
Even though it was founded in the UK and is headquartered in New York, Barclays serves everyone in the U.S. with various products, such as savings accounts, CDs, and credit cards. It also prides itself on minimal fees like Discover Bank and has a handy mobile app you can use to deposit checks, monitor your accounts, and more.
Bottom Line
Discover Bank is FDIC insured and a solid pick for online banking with a wide range of products and low fees. Before you open an account with it, however, be sure to explore options at other financial institutions. You can also choose Discover for certain products and go to another reputable bank for others.
Frequently Asked Questions
Does Discover Bank only offer credit cards?
No. While Discover is known for its credit cards, it’s a full service bank that offers various other products, like checking accounts, savings accounts, money market accounts, CDs and loans. You may benefit from the bank even if you don’t want a Discover card or Discover debit card, as there are several Discover accounts to choose from.
Is Discover Bank safe?
Yes, Discover Bank is FDIC insured, meaning your money is protected up to $250,000 per depositor in the event the bank fails.
What makes the Discover debit card unique?
The Discover debit card is one of the few debit cards that offers cash back rewards. You can earn 1% cash back on up to $3,000 in debit card purchases per month.
Who owns Discover Bank?
Discover Financial Services owns Discover Bank, an American financial services company. Headquartered in Illinois, Discover Financial Services specializes in a number of lending products and payment services.
Is it possible to deposit cash into a Discover Bank account?
Discover Bank does not accept cash deposits. It does, however, have a large, fee-free ATM network you can use to make cash withdrawals.
Is Discover Bank offering any bonuses or special promotions for new customers?
At this time, Discover Bank does not have any bonuses or promotions for existing or prior customers. Check the website often as this might change.
Does Discover Bank charge many fees?
No. Just like other online banks, Discover Bank does not charge monthly maintenance fees, inactivity fees, overdraft fees, and other fees you might find at traditional banks with physical locations.
