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Discover Bank review
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Updated: December 29, 2023
We adhere to strict standards of editorial integrity to help you make decisions with confidence. Please be aware that some (or all) products and services linked in this article are from our sponsors.
We adhere to strict standards of editorial integrity to help you make decisions with confidence. Please be aware that some (or all) products and services linked in this article are from our sponsors.
Brick-and-mortar banks are expensive to operate, which is why online-only banks can offer accounts with better interest rates and lower fees than a traditional bank.
Discover Bank is one such bank and offers a full suite of checking, savings, money market and CD accounts with competitive rates and no monthly fees.
If that sounds good to you, follow along with this review to find out if Discover is the right fit for your banking needs.
Pros and cons of Discover Bank
Pros
- No monthly fees or overdraft fees
- No minimum balance requirements
- Competitive cash-back checking account
- Competitive APY for its CDs, and IRA CDs are available
- 24/7 phone customer support
Cons
- No physical locations
- No out-of-network ATM reimbursement
- No brokerage account option, so it's not a full-service banking solution
What is Discover Bank?
Discover Bank is an online bank owned and operated by Discover Financial, the institution behind the popular line of Discover credit cards with nearly 50 million cardholders in the United States. Discover is a diversified financial institution offering an array of financial products including private student loans, personal loans, home equity loans, Dinerâs Club and its own ATM network, PULSE.
The bankâs primary checking and savings accounts offer the exact features you would expect from a modern online bank. And with some other banks getting publicity for ending their free checking products, a truly free online checking account is a great alternative to a traditional bank account, if an online-only bank meets your needs.
I have banked exclusively online for about two years, and the only thing I canât do is deposit cash. If you are happy managing your bank accounts from your web browser and your smartphone and rarely need to deposit cash, online banks offer a great product at a very low cost.
What is Discover Bank?
Discover Bank is an online bank owned and operated by Discover Financial, the institution behind the popular line of Discover credit cards with nearly 50 million cardholders in the United States. Discover is a diversified financial institution offering an array of financial products including private student loans, personal loans, home equity loans, Dinerâs Club and its own ATM network, PULSE.
The bankâs primary checking and savings accounts offer the exact features you would expect from a modern online bank. And with some other banks getting publicity for ending their free checking products, a truly free online checking account is a great alternative to a traditional bank account, if an online-only bank meets your needs.
I have banked exclusively online for about two years, and the only thing I canât do is deposit cash. If you are happy managing your bank accounts from your web browser and your smartphone and rarely need to deposit cash, online banks offer a great product at a very low cost.
Discover Bank features
| Features | Details |
|---|---|
| Accounts | Savings, Checking, Money Market, CDs |
| Access | Web Based, iPhone App, Android App |
| Amount of branches | 0 |
| ATM reimbursement | â |
| Online deposits | â |
| FDIC insurance | â |
| Customer service | Phone: 24/7; Live Chat: 24/7; Email |
Discover Bank accounts and features
Discover Bank offers everything you would expect from an online bank. Features include a cash-back debit card, high-yield savings and a large network of no-fee ATMs.
Cashback checking
The flagship account of Discover Bank is the Cashback Checking account. This account has no monthly fee. Nor does it have a minimum balance or direct deposit requirement. And the included debit card offers 1% cash back on purchases up to $3,000 per month.
This is better than most debit cards youâll find in banking today. Logging in to the Discover website or app gives users access to free online bill pay. In addition, users can reorder checks or a replacement debit card at no fee. And like many other online banks, Discover lets you get paid up to two days early with its Early Pay feature.
Some activity does incur a fee, however, though these are not very common activities for responsible bank customers. For example, you donât pay any fees for incoming or outgoing ACH transfers or incoming wire transfers, but outgoing wires have a $30 fee.
Discover savings
| Highlights | Details |
|---|---|
| Available for | IRA |
| Account fees | None |
| Custodial | No |
| Savings rates | Minimum Deposit $0 3.90% |
Discoverâs savings account pays a 3.90% APY as of July 18, 2022. This is in the upper tier of interest rates and comparable to many other online banks. And when compared to the big banks like Chase, Citi and Bank of America, Discoverâs savings account pays far better. This makes the Discover Online Savings account a great choice for an emergency fund.
You can get a higher interest rating with mobile banks like Aspiration and Varo. But Discover still has one of the best high-yield savings accounts on the market right now, and you don't have to meet a certain balance requirement to get the best rates like you do with some competitors.
Like the checking account, there are no minimum balances to avoid fees. So this no-frills savings account is a great place to park a chunk of cash that you donât expect to need for a long while, such as for a home down payment. This savings account is Discoverâs standout product and my favorite account offered by Discover Bank.
Open a Discover savings accountDiscover money market
| Category | Details |
|---|---|
| Available for | Taxable, IRA |
| Account fees | None |
| Savings rates | Minimum deposit $250 at 3.80%Minimum deposit $10,000 at 3.85% |
Another reason to bank with Discover is to take advantage of its money market account. At the time of writing, it pays over 1% for balances under $100,000, and you get a small boost for balances over this amount. There's no minimum balance requirement or fees either. And you also get free ATM withdrawals at 60,000+ nationwide ATMs.
Looking for more money market account options?: The best money market accounts.
Discover Bank CDs
| Term | Minimum deposit | APY |
|---|---|---|
| 3 months | $2,500 | 2.00% |
| 6 months | $2,500 | 3.40% |
| 9 months | $2,500 | 3.50% |
| 12 months | $2,500 | 4.75% |
| 18 months | $2,500 | 4.75% |
| 24 months | $2,500 | 4.30% |
| 30 months | $2,500 | 4.30% |
| 36 months | $2,500 | 4.30% |
| 48 months | $2,500 | 4.00% |
| 60 months | $2,500 | 4.00% |
| 84 months | $2,500 | 3.80% |
| 120 months | $2,500 | 3.80% |
Discover Bank offers two types of CD accounts: a traditional CD and an IRA CD. As of August 19, 2022. APYs range from 4.75% for a 12 month CD, up to 3.80% for a 10-year CD. In the current interest rate and investment environment, however, CDs have fallen in popularity. The IRA CD works as either a traditional or Roth IRA.
Personal loans
One final Discover Bank feature is its personal loans offering. You can borrow $2,500 to $35,000, and you don't pay any origination fees. The current interest rate is 5.99% to 24.99% APR. Student and home loans are also available.
Discover Bank fees
As mentioned, Discover Bank doesn't charge any monthly account fees or require a minimum balance for its checking and savings accounts. You pay $30 outgoing wire transfer fees and fees for out-of-network ATM withdrawals. But overall, it's an excellent online bank for avoiding high banking fees.
How do I contact Discover?
One advantage of banking with Discover is that it offers 24/7 phone customer support at 1-800-DISCOVER. This isn't a given for online-only banks, and it's one selling point for Discover.
Is Discover Bank safe?
Discover Bank is a safe and secure online-only bank. Accounts get up to $250,000 FDIC insurance, so your money is safe. It also has numerous fraud monitoring and protection features in place, and you can freeze your debit card if it's lost or stolen.
Best alternatives
If you want a low-fee online bank with stellar customer service, Discover is one of your best options. However, some competitors can offer higher interest rates and have additional features Discover lacks.
| Highlights | Chime | CIT Bank | Discover Bank |
|---|---|---|---|
| Rating | 4.25/5 | 4.25/5 | 3.5/5 |
| Accounts | Savings, Checking | Savings, Checking, Money Market, CDs | Savings, Checking, Money Market, CDs |
| Online deposits | â | â | â |
| Physical branches | â | â | â |
| FDIC insurance | â | â | â |
| ATM reimbursement | â | â | â |
| Reviews | Chime Review | CIT Bank ReviewCIT Bank. Member FDIC. | Discover Bank Review |
| Links | Open account | Open account | Open account |
Chime is one of our favorite Discover alternatives if you don't want to pay monthly fees. Its savings account pays a much lower rate than Discover, and its fee-free checking account doesn't pay cash back. However, Chime has a useful SpotMe feature that lets you borrow up to $200 to hold you over until your next paycheck. It also has a credit-building card you can use to improve your credit score.
As for CIT Bank, it has a very comparaible money market account to Discover. Additionally, you can earn up to 4.60% with its Savings Connect account, and there's just a $100 minimum deposit requirement. See details here.
It's also worth mentioning that you don't have to stay online-only. Options like TD Bank have the advantage of in-person branch support if you need to speak to someone, and you can also open a TD Ameritrade account to consolidate your banking and investing under one roof.
Want even more options?: The best online banks like Chime.
CIT Bank. Member FDIC.
Bottom line
For individuals looking for a truly free checking and savings account with better-than-average interest rates plus debit card cashback, Discover Bank has you covered. However, with limited card acceptance, reports of longer-than-average times before an incoming deposit clears your account, and many unflattering reviews, it is far from perfect. But if you have simple needs that an online-only bank can handle, Discover Bank can handle it just fine.
Chime Disclosure - Chime is a financial technology company, not a bank. Banking services provided by The Bancorp Bank, N.A. or Stride Bank, N.A.; Members FDIC.1Save When I Get Paid automatically transfers 10% of your direct deposits of $500 or more from your Checking Account into your savings account.^Round Ups automatically round up debit card purchases to the nearest dollar and transfer the round up from your Chime Checking Account to your savings account.
