Discover Bank Review: Checking, Savings, and CDs

Banking Review

Vanessa and I have been Discover Bank customers for almost six years. We maintain bank accounts and credit cards with Discover because the company continues to emphasize quality customer service while offering competitive products.

In addition to 24/7 customer support (based entirely in the U.S.A), Discover Bank offers competitive interest rates and generous rewards through a variety of products, including the Discover checking account, savings account, money market account, CDs, and credit cards.

Discover Bank History

Since acquiring the Greenwood Trust Company in 1985, Discover has grown to be one of the largest financial firms in the country. Even with the continual growth, Discover’s dedication to customer service has earned the company numerous banking and customer satisfaction awards. In 2017, Discover was voted the best bank for customer loyalty for the 21st consecutive year, according to independent research provided by Brand Keys, Inc.

Discover Bank functions as an internet bank with one retail branch located in Greenwood, Delaware. By eliminating the infrastructure and costs associated with physical locations, Discover’s product offerings and deposit rates are highly competitive. Although the bank lacks retail branches, Discover offers its customers access to over 750,000 ATMs worldwide through its Discover and PULSE ATM networks, including more than 400,000 ATMs across the United States.

As an internet bank, Discover’s web-based platform is exceptional. Through the online platform or smartphone application, customers can transfer funds between accounts, pay bills, deposit checks, and monitor account balances. The user interface is well-designed, which makes navigation and account management very simple.

Also worth noting, all of Discover’s deposit account offerings are fully insured by the Federal Deposit Insurance Corporation (FDIC).

Discover Bank Checking Account

Discover offers one checking product, the Cashback Checking Account, which includes the following features:

  • 1% cash back on up to $3,000 in debit card purchases each month.
  • Link and make transfers between internal/external accounts for free.
  • Free access to more than 60,000 (no-fee) ATMs across the United States.
  • No account opening fees, monthly maintenance fees, or minimum balance requirements.

There are a few limitations you should be aware of:

  • The account does not earn interest (but offers cash back as mentioned above)
  • Only one physical branch location (the headquarter in Greenwood, Delaware)

Discover Bank Savings Account

The Discover Savings Account is one of the best savings products on the market, offering the following features:

  • No fees to open the account
  • No minimum opening deposit
  • No monthly maintenance fees
  • No monthly balance requirements
  • Competitive interest rate of 1.75% APY

When you open a savings account, Discover’s online dashboard allows you to connect and manage all of your Discover accounts. You can also connect an unlimited number of external accounts through this dashboard and transfer money between internal and external account for free.

For example, you might maintain a checking account with another bank if you prefer having access to a local branch. You can link your outside checking account to your Discover dashboard and push or pull money between accounts at any time, without paying a dime. As an added bonus, most transfers take less than two business days to complete.

For a detailed discussion and a complete list of benefits, see my Discover Savings Account Review.

Discover Bank Money Market Account

Discover’s Money Market Account is, in my opinion, the least valuable account offered by Discover. It functions much like the Discover Savings Account but offers less competitive interest rates.

  • Balances under $100,000 earn 1.60% APY
  • Balances over $100,000 earn 1.65% APY

Discover Bank Certificate of Deposit (CD)

Discover also offers a variety of CDs that pay interest monthly. Unlike a savings account, which allows you to withdraw your funds at any time, CDs require that your money remain deposited at Discover for a predetermined period of time. The interest rate on each CD varies by the length of deposit, with longer time horizons offering a higher APY interest rate.

All Discover CDs require a $2,500 minimum opening deposit to establish the relationship. Here are the latest CD interest rates, broken down by the required length of deposit.

  • 12-month CD: 2.25% APY
  • 24-month CD: 2.45% APY
  • 36-month CD: 2.50% APY
  • 60-month CD: 2.85% APY

These are highly competitive rates when compared to other banks, but remember that you must maintain the CD until the stated maturity date. If you withdraw your money before the CD matures, there are early withdrawal penalties discussed on the bottom of this page.

Additionally, Discover allows you to hold any of their CDs within an IRA account, which shelters any interest income from taxation.

Discover Bank Credit Cards

In addition to banking products, Discover offers several outstanding credit cards that are also managed through Discover’s online dashboard.

Discover it®

The Discover It Credit Card is one of the best cash back cards available, offering 5% cash back on rotating quarterly categories and 1% cash back on everything else, plus complimentary access to the Discover Deals shopping portal.

Discover is offering a limited-time promotion to double all cash back earned in your first year of card membership. For a detailed discussion, please see my Discover It Credit Card Review.

If you are a college student, the Discover It for Students offers the same generous reward structure plus an ongoing $20 good grade bonus. It’s easily the best student credit card on the market.

Discover it® Miles

Instead of offering 5% cash back in rotating categories, The Discover It Miles offers 1.5% cash back on all purchases.

The Discover It Miles is included in the double cash back promotion, which means that 1.5% cash back becomes 3% in your first year of card ownership. Earning 3% on all purchases is outstanding given this card has no annual fee.

Discover it® Secured

If you have very little existing credit or bad credit, Discover’s Secured Credit Card is a fantastic way to build or rebuild your credit.

The Discover Secured credit card earns 2% cash back at restaurants & gas stations on up to $1,000 in combined purchases each quarter, plus 1% cash back on all other purchases. But perhaps more importantly, the secured card can be converted into one of the traditional Discover credit cards mentioned above after 8 months of responsible usage. To my knowledge, Discover is the only credit card issuer to allow this conversion.

Discover Bank Review Summary

Discover is one of the only banks offering 24/7 customer service via phone, email, or social media. Perhaps even more importantly, Discover has remained committed to providing 100% U.S. based support. If you need support for any reason, at any time, you can contact Discover and connect with an English speaking representative.

Beyond excellent customer service, Discover offers a strong lineup of deposit products and credit cards. Specifically, I’m impressed by the competitive interest rates, reasonable fee structure, and robust online interface that allows you to move money between internal and external accounts (free of charge).

The combination of excellent support and features is difficult to find, which is why Vanessa and I continue choosing Discover for our banking needs.

Discover Bank Review: Checking, Savings, and CDs
Summary
Discover Bank's combination of excellent customer support, competitive interest rates, and unique account features is unmatched by most competitors, which is why Vanessa and I continue choosing Discover for our banking needs.
Features8.7
Total Cost9.4
Ease of Use9.6
Interest Rates8.8
Customer Support9.6
Strengths
Free transfers between internal/external accounts
No minimum balance requirements
Competitive interest rates
24/7 customer support
Transparent fees
Weaknesses
No physical branches
Weak money market account offering
9.2
Overall

5
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Joe
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Joe

Thank you for providing this ‘Cash Cow’ opportunity to open a Discover Bank Online Savings Account! This opening incentive is precisely what I needed to offset the low interest rate I receive from my bank in 2017! It reminds me of the old banking practices that I remember in the 80’s and 1990’s!

Grace
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Grace

Is this bank FDIC insured?

Colin Slabach
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Colin Slabach

Discover It sounds like the credit card for me. Thanks for this.