Discover may be famous for credit cards, but that's far from the whole story. One of the company's offerings is an online bank that offers a full range of accounts with no monthly fees. If you are interested in going fully online for banking, Discover Bank is certainly worth a look.
- Savings accounts
- CD investors
- Money market investors
- No fees
- IRA CDs
- Online depositors
Review of: Discover Bank
Reviewed by: Eric Rosenberg
Last modified: January 7, 2019
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.
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, Diner’s Club and its own ATM network, PULSE.
The bank’s 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 can’t 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
|Access||Website, iOS App, Android App|
|Amount of Branches||None|
|Customer Service||Phone: 24/7; Live Chat: 24/7; Email|
How Discover Bank Works
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.
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 you’ll 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.
Some activity does incur a fee, however, though these are not very common activities for responsible bank customers. For example, you don’t pay any fees for incoming or outgoing ACH transfers or incoming wire transfers, but outgoing wires have a $30 fee. Most notable to anyone who has paid insufficient funds fees, Discover charges $30 per occurrence with a limit of one charge per day.
Discover Bank Savings Account
Discover’s savings account pays a solid 2.00% interest rate. This is in the upper tier of interest rates and comparable to many other online banks. However, when compared to the big banks like Chase, Citi and Bank of America, Discover’s savings account pays far better. This makes the Discover Online Savings account a great choice for an emergency fund.
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 don’t expect to need for a long while, such as for a home down payment. This savings account is Discover’s standout product and my favorite account offered by Discover Bank.
|Available For||Taxable, IRA|
Discover Bank Money Market Account
Discover Money Market
Discover's money market accounts keep the promise of zero fees while paying account holders higher APYs than regular savings accounts.
|Available For||Taxable, IRA|
Discover Bank CD Rates
Discover Bank CDs
Discover Bank offers two types of CD accounts: a traditional CD and an IRA CD. APYs range from 0.35% for a 3-month CD, up to 3.10% 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.
Discover Bank Alternatives
Pros and Cons
- No Fees — No fee accounts with no minimum balance or direct deposit requirements.
- Decent APY — High interest rate savings and cash back opportunity with debit card.
- Limited Fees for Overdrafts — You’ll pay only one fee on insufficient funds per day, plus there are no fees for a returned deposit.
- Large ATM Network — 60,000 fee-free ATMs in the United States.
- No Physical Branch Locations — This will be a turnoff if you like to bank in person.
- Limited Account Options — In comparison with other banks, Discover is a bit bare bones.
- Debit Card Not Accepted Everywhere — Unlike Visa or MasterCard, there’s limited acceptance of Discover-branded debit cards.
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.