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Discover Bank Review 2022: Savings account APY 5 times higher than national average, but limited account options

Illustration by Fortune; Original logo by Discover Bank

Discover is perhaps best known for its credit card offerings that were launched back in 1986, but the Utah-based financial services company also operates a full-service digital bank. Founded in 2000, Discover Bank offers a range of products including checking, savings, money market accounts, and certificates of deposit (CD).

The bank’s checking account is one of the few in the industry that offers cash rewards, while the Discover savings account features an industry-leading 3% APY, and its 12-month CDs offer an APY as high as 4%—all important benefits for customers wanting to maximize the earning potential of their deposits. What’s more, many of Discover’s accounts have few if any fees.

If there is a drawback to keep in mind for those considering banking with Discover, it is the one-size-fits-all approach to account options. There’s just one type of checking account, one type of savings account, and one money market, so those with more nuanced banking needs may find that Discover falls a bit short.

All rates and fees are current as of November 22 and are subject to change.

Discover Bank offerings

Discover Bank’s account options include a cash-back checking, a high-yield savings, and a money market account. The bank also offers CDs with terms ranging from 1.5% to 4.25%.

Checking and savings accounts

Discover Cashback Checking

  • APY: 1% cash back

  • Fees:

    • Maintenance fee: $0

    • Overdraft fee or insufficient funds: $0

    • Bank check: $0

    • Expedited delivery of lost debit card: $0

    • Check orders: $0

    • Outgoing wire transfer: $30

  • Minimum balance requirement: $0

Discover’s Cashback checking offers 1% cash back on up to $3,000 in debit card purchases each month. In addition, account holders have access to more than 60,000 fee-free ATMs across the country. This account also features the option to get paid up to two days ahead of schedule when you establish direct deposit for your paychecks.

High-yield savings account

  • APY: 3%

  • Fees:

    • Monthly maintenance fee: $0

    • Insufficient funds fee: $0

    • Bank check: $0

    • Stop payment order: $0

    • Expedited delivery of bank checks: $0

  • Minimum opening deposit: $0

The APY on Discover’s savings account is five times the national savings average.

Money market accounts

  • APY: Up to 2.95%

  • Fees:

    • Insufficient funds: $0

    • Stop payment: $0

    • Official bank check: $0

    • Standard checks: $0

    • Replacement debit card: $0

    • Expedited delivery for debit card replacement: $0

    • Expedited delivery of bank checks: $0

  • Minimum opening deposit: $2,500

Those with balances of $100,000 or lower earn an APY of 2.9%. Balances that exceed $100,000 are eligible for the 2.95% APY. Money market withdrawals can be made at more than 60,000 ATMs across the country. Certain withdrawals and transfers from money market accounts are limited to a combined total of six per month—though the bank says it is not currently enforcing the monthly limit.

Certificates of deposit

  • APY:

    • 3-month: 1.5%

    • 6-month: 2.75%

    • 9-month: 2.85%

    • 12-month: 4.0%

    • 18-month: 4.05%

    • 24 month: 4.10%

    • 5-year: 4.25%

  • Fees:

    • Official bank check: $0

    • Wire transfer fee: $30

  • Early withdrawal penalty: Varies depending on CD term

    • Less than 1 year: 3 months simple interest

    • 1 year to 4 years: 6 months simple interest

    • 4 years to 5 years: 9 months simple interest

    • 5 years to 7 years: 18 months simple interest

    • 7 to 10 years: 24 months simple interest

  • Minimum deposit to open: $2,500

The APY on Discover CDs is locked in and is not impacted by the fluctuations of the market. While the minimum deposit for Discover CDs is higher than many of its competitors, the rates offered by the bank are more than 19 times the average national savings rate.

Other services Discover Bank offers

Discover Bank also offers a variety of additional financial services.

  • Retirement accounts: Discover offers traditional and Roth IRA accounts as well as IRA CDs.

  • Student loans: Discover offers variable and fixed-rate student loans with rates ranging from 4.74% to 14.99%.

  • Personal loans: Personal loans of up to $35,000 are available from Discover to cover a variety of needs including home renovations, medical costs, and debt consolidation. Interest rates range from 6.99% to 24.99%.

  • Home loans: The home loan products available from Discover include home equity loans and mortgage refinances. The APRs on these products range from 6.74% to 7.99%.

  • Financial education: Discover Bank publishes the Modern Money blog, which provides education and guidance on everything from saving, budgeting, and family finances to retirement and banking 101.

The Discover Bank platform and customer support

Discover Bank features a mobile app and online platform. Using the mobile app, customers can deposit checks, locate ATMs, pay bills, transfer money between accounts, and even temporarily freeze a debit card when needed, such as after losing the card or if there’s a security concern. You can also unfreeze your card via the app.

Discover customer service representatives are available by phone 24/7 every day of the year. The bank can also be reached by mail at its Salt Lake City headquarters. The bank does not offer walk-in service at its Utah offices.

Pros and cons of Discover Bank

As with any financial institution, there are pros and cons to banking with Discover.

Pro: Generous APY on savings and CDs. The APY on Discover’s savings account is an industry-leading 3% while its CDs offer up to 4.25%.

Pro: Cash-back checking account. Discover is among the few banks in the industry offering a cash-back checking account.

Pro: Minimal to no fees. Many of its accounts have no fees including no maintenance fees, insufficient funds fees or stop payment fees.

Con: Limited account options. Discover offers only one checking account, savings account, and money market account. This can be a drawback for those who have more complex financial needs.

Con: No brick-and-mortar branch locations: Discover is an online-only bank, which can be a drawback for those who like to bank in person. There’s only one physical location in Salt Lake City.

Frequently asked questions

How do I deposit money into my Discover Bank account?

There are several ways to deposit money to Discover accounts including making a mobile check deposit with the Discover banking app, completing an online transfer to your Discover account, or setting up direct deposit. You can also mail checks made payable to you with a deposit slip to Discover Bank in Utah.

What is the Zelle limit for Discover?

Discover banking customers may send a total of $600 per day using Zelle.

How long does a Discover Bank transfer take?

While transfers from one Discover deposit account to another are instant, transfers to or from outside banks can take up to four to five business days.

This story was originally featured on Fortune.com

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