Discover was established in 1985 as a credit card company and quickly became one of the most well-known credit card providers in the world. In 2000, the company expanded its financial services to include banking and opened a banking branch. Throughout the years, Discover Bank worked to expand its selection of financial products and accounts.
While most people associate Discover with consumer and business credit cards, such as the Discover it card, the company now provides a wide range of different types of banking accounts and investment options. Reviewing the characteristics of these banking services will help you determine if Discover Bank is the right bank for you.
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Discover Account Options
Discover Bank offers several types of bank accounts to accommodate different consumers’ needs and financial goals.
The Discover Bank checking account is unique because while you don’t earn interest on your account balance, you can earn cash back when you make purchases using your debit card. You earn 1% cash back on up to $3,000 in debit card purchases each month.
When you open a checking account with Discover Bank, there’s no minimum deposit or balance. You don’t pay fees for:
- Monthly maintenance.
- Insufficient funds.
- Official bank checks.
- Outbound automated clearing house payments.
- Check orders.
- Online bill pay.
- Replacement debit cards.
There’s an extensive network of Discover Bank no-fee ATMs but the bank only has one physical location, making it tough to complete transactions in person. For mobile deposits, Discover Bank puts a three-day hold on funds for transactions larger than $200.
The Discover Bank savings account is an online savings account that allows you to complete transactions, such as deposits and transfers, completely online. There’s no debit card associated with your account but you can use official bank checks to access your funds as needed. With this type of savings account, you earn interest on your account balance and the higher your balance, the more interest you earn.
The current annual percentage yield (APY) for a Discover Bank online savings account is 1.01%, which is higher than some big-name banks. This interest is compounded daily and paid monthly. There’s no minimum deposit needed to open an account and no minimum balance required. Savings account holders are also not responsible for monthly maintenance or insufficient funds fees.
When you put your money in a money market account, it earns interest similar to a savings account but you have easy access to your funds when needed. With a Discover Bank money market account, you can access your money online to transfer to other accounts or through ATMs to withdraw cash. You can also use a debit card or check associated with the account.
When you open a money market account with Discover Bank, you earn 0.85% APY on balances under $100,000 and 0.90% APY on balances over $100,000. You’re not required to maintain a minimum balance and there are no fees for withdrawals, insufficient funds, account closures, checks, debit card replacements, or online bill payments.
Certificate of Deposit
With a certificate of deposit (CD) account, you earn interest on your balance but your funds aren’t as easily accessible as they would be in a savings or money market account. When you open a CD account, you choose a term for the CD and you can’t withdraw funds during the term without paying penalties.
The Discover Bank CD account offers one-, two-, or five-year terms and the longer the term, the more interest you earn. With a 12-month term, you earn a 0.90% APY while a 24-month term earns you 1.01% and a five-year term earns 1.15% APY. There are no account fees or fees associated with official bank checks for the CD account.
IRA Saving Account
If you’re planning for retirement, consider an IRA savings account through Discover Bank. The bank makes it easy to contribute to your IRA account with online transfers. With this retirement savings account, you can save your money while benefiting from tax advantages.
You fund your Roth IRA account with after-tax money and your contributions aren’t tax-deductible until you retire. If you choose a traditional IRA, you fund the account with pre-tax money and your contributions are tax-deductible up to certain limits.
IRA Certificate of Deposit
With a Discover Bank IRA CD account, you can save for retirement with guaranteed returns. After you choose between a Roth or traditional IRA, you select your CD term. You can choose a one-, two-, or five-year term but keep in mind, the APY is higher with a longer term.
You can roll over retirement savings from other accounts to the Discover Bank IRA CD account, transfer funds from another IRA, or contribute funds to the account from other sources.
Pros and Cons of Discover Bank
Discover Bank customers have reported both pros and cons to doing business with the bank.
Discover Bank has a network of 60,000 convenient no-fee ATMs, many of which are located in retail stores. Most accounts are associated with no monthly fees and no minimum balances or opening deposits. Some accounts also include cash-back rewards on debit transactions.
Discover Bank only has one physical branch location so if you prefer to do your banking in-person, it may pose a challenge. The bank doesn’t offer an ATM card for its online savings account so you can’t quickly withdraw cash from this account when you need it. While the interest rates associated with Discover Bank accounts are competitive with many major banks, you may find higher rates at other financial institutions.
Who Does Discover Work Best For?
If you’re a technologically savvy consumer who doesn’t mind completing most banking transactions online, Discover Bank may be a good fit for you. There are no minimum deposits or balances so it’s also a good choice if you want to avoid fees but don’t have a large number of funds to open an account.
How to Open an Account at Discover
You can open an account by calling Discover Bank at 1-800-347-7000. You can also sign up for an account online by visiting the Discover Bank website and choosing the account you want to open. Provide the information as requested, including your name, address, and Social Security number.
Confirm your email address and fund the account when you sign up or at a later date. After you create an online account, you can sign in to complete banking transactions and check account balances.
If you’re interested in online banking and want to avoid fees, Discover Bank may be the best choice for you. Review the types of accounts the bank offers and consider other options before deciding whether to open an account.
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