Discover Bank Review

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Discover Bank

Overall Rating

9.2

Bottom Line

If you’d like an easy online bank to work with that also offers a wide range of other services such as credit cards, student loans, and CDs, then Discover Bank might be right up your alley.

Checking

8.9

Savings

9.8

CDs

9.0

MMAs

8.9

You’ve probably seen the commercials and can recall the phrase: “It pays to discover.”

You may also be familiar with their widely popular Discover Card, which offers 5% cash back on rotating categories, like restaurants, supermarkets, and gas stations.

In fact, Discover Card is one of the most popular credit cards in the U.S., with over 57 million cardholders.

You might not be aware, however, that Discover also has an online bank and offers a wide array of banking services in the U.S.

Today, I’m going to conduct a thorough review of Discover Bank and answer some questions  you might have to help you decide if it’s right for you

Who Is Discover Bank Owned By?

Discover Bank is owned by Discover Financial Services, which is headquartered in Riverwoods, Illinois. The company employs over 16,000 people and processes a whopping $376 billion in transactions annually. Discover Financial also owns the following major brands:

  • Discover Network is a global financial payments network.
  • Diners Club International is a travel-focused brand that offers credit cards, access to airport lounges, and discounts at signature hotels.
  • PULSE offers credit card and debit payment services to businesses. This division also provides access to over 2 million ATMs throughout the world.

What Does Discover Bank Offer?

Discover Bank is an online bank that offers:

Discover Checking

A unique feature of Discover Checking is that they offer 1% cashback on all debit card purchases up to $3,000. This is a very rare feature for checking accounts.

Additionally, there are absolutely no monthly maintenance fees or transaction fees, regardless of your checking account balance—and cardholders have access to over 60,000 ATMs throughout the U.S.

Discover Online Savings

With Discover’s Online Savings Account, you’ll earn an enticing 1.01% APY on deposits. Further, it’s super easy to deposit checks and transfer funds via the Discover mobile app.

Looking at the numbers, an online savings account deposit of $15,000 can earn nearly $150.75 each year, without any effort whatsoever from your end.

Money Market Accounts

Discover also offers Money Market Accounts, which allow account holders to have access to their cash while earning up to 0.90% APY (for balances over $100,000), 0.85% APY (for balances under $100,000).

You might be wondering what the difference between Discover’s Money Market Account and Online Savings Account is. That’s a perfectly valid question.

The main difference is a Money Market Account gives you immediate access to your cash, whether you want to write a check or withdraw funds through Discover’s network of 60,000 ATMs. The downside is that you earn slightly less interest compared to an Online Savings Account.

On the other hand, while your interest earnings are slightly higher with an Online Savings Account, you’re not able to withdraw funds at an ATM. Instead, you have to transfer the funds electronically to a linked checking account.

Certificate of Deposit (CD)

CDs are a safe investment vehicle because they provide a guaranteed interest rate that’s relatively high with virtually no risk to the investor.

At the same time, you are not able to touch the funds you invest in CDs until they’ve matured. Discover’s Certificate of Deposit interest rates are very competitive.

So, if you’re in the market, they’re definitely worth checking out—assuming you don’t need immediate access to the funds.

Today’s Rates:
Discover Bank CDs

Rates last updated: July 7, 2020
ProductTermAPY
CD3 Month0.25%
CD6 Month0.45%
CD9 Month0.55%
CD12 Month0.90%
CD18 Month0.90%
CD2 Year1.01%
CD2.5 Year1.05%
CD3 Year1.05%
CD4 Year1.10%
CD5 Year1.15%
CD7 Year1.15%
CD10 Year1.15%
IRA CD12 Month0.90%
IRA CD2 Year1.01%
IRA CD5 Year1.15%

IRA Certificate of Deposit

Discover’s IRA Certificate of Deposit (IRA CDs) offers similar returns as their traditional CD, but with the tax benefits that come with a retirement savings account.

There are two different types of Discover IRA CDs:

  1. Traditional IRA CD:
    Enables you to deposit tax-deferred funds into an account; you’ll have to pay taxes when you withdraw the funds during retirement
  2. Roth IRA CD:
    Enables you to deposit post-tax dollars into an account; when you withdraw funds during retirement, you don’t have to pay any taxes. For this reason, Roth IRAs are recommended for those who anticipate their earnings to be higher at the time of retirement.

For more information on the differences between the two kinds of IRAs, read our post on Roth vs. Traditional IRA’s.

Discover Personal Loans

If you need to take out a personal loan to pay for an emergency expense or consolidate high-interest credit card debt, you might consider borrowing from Discover Personal Loans.

You’ll enjoy the benefits of no origination fees and flexible repayment terms as long as you make payments on time.

Discover Student Loans

If you’re in the market for a private student loan to pay for college, Discover Student Loans offers both fixed and variable interest rate plans.

Variable-rate loans currently range from 1.49% – 11.49% APR. Fixed rates range from 4.49% – 12.39% APR (as of 6/1/2020).

Home Equity Loans

With a Discover Home Equity Loan, you can borrow money to pay off other expenses—such as high-interest credit cards loans or a home renovation—using your home equity as collateral.

Home equity loans tend to have interest rates that are much lower than personal loans. For example, with a Discover Home Equity Loan, the APR starts at 3.99%.

Home equity loans are a little complicated, so I don’t recommend rushing into them without doing your research. (Of course, you need to be a homeowner to take a home equity loan out in the first place.) The details vary widely depending on your loan amount, equity amount, income, and credit score, among other things.

Discover Credit Cards

Discover’s credit card presence is growing rapidly in the U.S. market due to competitive cashback rewards offerings and a wide range of credit card products. Best of all, none of their cards have annual fees.

Discover it Card

The Discover it card offers 5% cash back on rotating quarterly categories.

It also offers a 100% cashback match on all the cash back you’ve accumulated during your first year.

Learn More:

Discover it Miles

The Discover it Miles Card is Discover’s travel-focused credit card offering.

This card offers unlimited 1.5x miles earned on all purchases, as well as unlimited miles earned match at the end of your first year of card ownership.

Learn More:

Discover it Chrome

The Discover it Chrome Card offers 2% cash back on gas station and restaurant spending (on up to $1,000 in spend each quarter) and 1% cashback on all other purchases.

Learn More:

Discover it Secured Card

The Discover it Secured Card is designed for those who want to rebuild their credit.

Similar to the Chrome Card, the Secured card offers 2% cash back on gas station and restaurant spending (on up to $1,000 in spend each quarter) and 1% cashback on all other purchases.

Learn More:

Discover it Student Cash Back

The Discover it Student Cash Back Card is designed for college students and offers 5% cash back on rotating categories each quarter, and 1% cashback on everything else.

What’s more, the card literally pays you to get good grades. College students who maintain a GPA of 3.0 or higher are eligible for a $20 statement credit!

Learn More:

Discover it Business Card

The Discover it Business Card is a straightforward business credit card that offers unlimited 1.5% cashback on all purchases and a 100% cash back match at the end of your first year.

Learn More:

Discover it Chrome for Students

The Discover it Chrome for Students Card is designed for college students that want to earn 2% cash back at gas stations and restaurants—similar to the standard Discover it Chrome card. This card also offers a $20 statement credit for students who achieve a 3.0 GPA or better.

NHL Discover it Card

The Discover it NHL Discover it Card is the official credit card of the NHL. Cardholders can save 10% on NHL.com and earn 5% cash back on rotating categories each quarter.

Further, diehard NHL fans will love the fact that the NHL Discover it Card comes with their favorite team’s design.

FAQs

Does Discover Card have a bank?

Yes. Discover Financial Services has a bank, which offers a wide range of financial services, including high-yield savings accounts.

Is Discover a reliable bank?

Yes. Discover Bank is a reliable bank that offers checking accounts, savings accounts, certificates of deposit, money market accounts, and more.

Is Discover Bank FDIC insured?

Yes, Discover Bank is FDIC-insured. As such, deposits of up to $250,000 are protected.

Is Discover Bank Right For You?

I hope that I’ve given you enough information to make this decision. If you’d like an easy online bank to work with that also offers a wide range of other services such as credit cards, student loans, and CDs, then Discover Bank might be right up your alley.

On the other hand, if you’d prefer a relationship with a traditional brick-and-mortar banking institution, you may want to look elsewhere. Even then, you could still maintain an Online Savings account with Discover and earn 5% cashback with a Discover it card.

I personally like the high-yield APY on their Online Savings Account, It’s great for an emergency fund, for example. The 5% cashback offered on some of their credit cards is also appealing.

As an investment institution, however, I recommend investing your funds in the stock market. For more information on that, check out my in-depth YouTube presentation: Best Investing Strategies.

Ultimately, the decision of where to put your money is up to you. Do your due diligence, assess your options, and take your time when making a decision. You’ll make the right one. Thanks for reading!

Additional Disclosures: Millennial Money has partnered with CardRatings and creditcards.com for our coverage of credit card products. Millennial Money, CardRatings and creditcards.com may receive a commission from card issuers. This site does not include all financial companies or financial offers. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities.

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