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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:
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 1.50% APY on deposits. Further, it’s super easy to deposit checks and transfer funds via the Discover mobile app.
Looking at the numbers, a online savings account deposit of $15,000 can earn nearly $225 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 1.40% APY.
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.
Here are the interest rates currently available:
- 3-month term: 0.35% APY
- 6-month term: 0.65% APY
- 9-month term: 0.70% APY
- 12-month term: 1.75% APY
- 18-month term: 1.75% APY
- 24-month term: 1.75% APY
- 30-month term: 1.75% APY
- 3-year term: 1.80% APY
- 4-year term: 1.80% APY
- 5-year term: 1.80% APY
- 7-year term: 1.80% APY
- 10-year term: 1.80% APY
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:
- 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
- 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, check this out.
Discover Personal Loans
If you need to take out money 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 2.80% – 11.37% APR. Fixed rates range from 4.74% – 12.74% APR.
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.
Here is a summary of the current credit cards that Discover offers:
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.
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.
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.
Discover it Secured Card
The Discover it Secured Card is designed for those who want to rebuild their credit. (Not sure what a secured credit card is? Check this out.)
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.
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!
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.
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.
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.
So, 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!