Discover Bank is an online bank operated by the American financial services company, Discover Financial Services.
With almost 50 million cardholders, Discover is the third-largest credit card issuer in the U.S. But, does that mean it’s the right bank for you?
In this post, you’ll learn about all of Discover Bank’s financial products and services to help you make that decision for yourself.
About Discover Bank
The Discover Card was first introduced in 1985 by the Sears Financial Network.
In 1999, after a few different owners, the financial institution was officially renamed Discover Financial Services.
In 2000, Discover acquired the Greenwood Trust Company and rebranded it as Discover Bank.
While Discover is now fully an online bank, the company still owns and operates the original branch of The Greenwood Trust Company in Delaware, making it the bank’s only physical location.
Today, Discover’s headquarters is located just outside of Chicago. The company employs over 15,500 people and has over $92 billion in assets under management.
Discover Checking Account
Discover Bank’s Checking Account stands out from most other banks because of the Cashback Debit feature.
You won’t earn interest on your deposits, but with Cashback Debit, you can earn up to 1% cash back on up to $3,000 of debit card purchases each month.
So, if, for example, you spend $2,000 on your card one month, you’ll earn $20 cash back.
By the end of the year, this can add up to a lot of free money, Not a bad deal!
Discover Checking also comes with no monthly maintenance fees, and no minimum opening deposit requirements, so you won’t have to pay anything to open and keep a checking account.
Discover Online Savings
Discover Savings Accounts allow you to earn up to 0.50% APY on your deposits.
This potential earning rate is considerably higher than most competitors (according to Discover, it’s more than 5x higher than the national average).
If you open a Discover Online Savings account with $15,000, for example, you’ll be making around $75 per year in APY earnings — just for letting your money sit there.
And, as with Discover Checking, Discover Online Savings charges no monthly maintenance fees. This feature alone makes Discover Online Savings appealing.
With so many of the big national banks charging monthly fees on savings accounts, it’s nice to know that you won’t have to worry about that with Discover.
What’s more, there are no minimum balance requirements, so you don’t have to worry about keeping your account balance over a certain number.
You may get charged a fee if you make excessive withdrawals, though.
Discover CDs (Certificate of Deposit)
Discover Bank’s Certificates of Deposit (CDs) offer up to 2.15% APY on deposits.
To open a CD account with Discover Bank, the minimum opening deposit is $2,500, and you can pick the term length that you prefer.
Here is a summary of the APYs you can earn with a Discover Bank CD account:
|Discover Bank 5 Year CD||2.15% APY||$2,500|
|Discover Bank 7 Year CD||2.15% APY||$2,500|
|Discover Bank 10 Year CD||2.15% APY||$2,500|
|Discover Bank 4 Year CD||1.80% APY||$2,500|
|Discover Bank 3 Year CD||1.70% APY||$2,500|
|Discover Bank 2 Year CD||1.60% APY||$2,500|
|Discover Bank 30 Month CD||1.60% APY||$2,500|
|Discover Bank 18 Month CD||1.50% APY||$2,500|
|Discover Bank 1 Year CD||1.20% APY||$2,500|
|Discover Bank 9 Month CD||0.30% APY||$2,500|
|Discover Bank 6 Month CD||0.25% APY||$2,500|
|Discover Bank 3 Month CD||0.20% APY||$2,500|
As a quick refresher, CDs are similar to high-yield savings accounts HYSA’s in that you can earn better APYs than with traditional checking and savings accounts.
However, the downside to CDs is that you have to lock your money into the CD for a fixed period of time.
If you try to take your money out early, you’ll probably be looking at an early withdrawal penalty.
Discover Money Market Accounts
Discover Money Market Accounts are similar to high-yield savings accounts (HYSAs) in that they allow you to earn higher interest rates on your deposits without any early withdrawal penalties.
There are two APYs on Discover Money Market Accounts, depending on how much money you can deposit.
If your balance is over $100,000, you can earn up to 0.45% APY; however, if you deposit under $100,000, you’ll earn slightly less.
Both accounts require a $2,500 minimum deposit, and there are no monthly fees or extra maintenance charges.
You can use your Money Market Account to pay bills, write checks, and even take out cash for free at over 60,000 ATMs.
However, there’s a limit to how many monthly transactions you can make (similar to traditional savings accounts) so you don’t want to use it like a checking account.
Discover Bank offers two different types of Individual Retirement Account Certificates of Deposit (IRA CDs): Roth IRA CD, and Traditional IRA CD.
Both accounts function like retirement-focused savings accounts, allowing your money to grow at a fixed rate, without the risk of losing value due to market volatility
Roth IRA CD
With a Roth IRA CD, you are depositing post-tax money, meaning that you’ve already paid taxes on it.
If the account has been open for over five years, you can take out money without any penalties. You can also withdraw money at any point if you’ve had the account open for at least 5 years.
Traditional IRA CD
Discover’s Traditional IRA CDs allow you to deposit pre-tax earnings into the account, similar to how traditional IRAs work.
As a result, you can save a ton of money on tax deferrals. The downside is that you won’t be able to touch the money until you retire (without paying an early withdrawal fee).
Both accounts require a $2,500 opening deposit.
IRA Savings Account
Discover Bank’s IRA Savings Account gives you the same tax benefits that you get from the Traditional and Roth IRA CD accounts, but with the added perks of a savings account.
This means you don’t have to lock in your funds for a specific term.
Discover Bank pays a competitive APY on IRA Savings Accounts and has zero monthly fees.
As with most savings accounts, certain types of account transfers and deposits are limited to six transactions per month.
If you go beyond that, you’ll most likely have to pay an excessive transaction fee.
Discover Student Loans
Discover Bank has a variety of student loans to choose from, including student loans for undergraduates, graduates, MBA students, and parents, among others.
Discover’s student loan accounts come with both variable and fixed rates.
Variable rates range from, 1.79% – 11.24% APR, and the interest rates for fixed-rate loans range from 4.49% – 13.34% APR.
One added bonus is that Discover offers cash rewards for good grades. College and grad school students that achieve a 3.0 GPA or higher could be looking at a one-time 1% cash reward bonus.
Terms apply, so be sure to read the fine print if this is something that interests you.
Discover Personal Loans
Discover Bank offers personal loans up to $35,000. At the time of this writing, the interest rates range from 5.99% to 24.99%.
You need to have a minimum credit score of 660 to qualify for a Discover personal loan. If you qualify, there are no fees (other than interest) as long as your payments are on time.
Personal loans, if paid responsibly, can help you take control of your personal finances.
For example, if you are carrying lots of high-interest credit card debt, it might make sense to take out a personal loan to pay that off.
Discover Home Loans
Home Equity Loans
Discover Bank offers Home Equity Loans from $35,000 up to $300,000. There are no fees due at closing, and you can lock in a fixed APR (from 6.49% – 12.99%) for a 10, 15, 20, or 30-year term.
Home equity loans are often used to pay down high-interest credit card debt or cover the costs of home repairs.
Discover’s rates and no-fee structure are competitive. Just make sure you are able to pay back whatever you borrow.
Refinance Home Loans
Existing homeowners can also refinance mortgages with Discover Bank. Discover offers mortgage refinance from $35,000 up to $300,000.
There are no fees or cash required at closing. Interest Rates are fixed ranging from 4.99% to 9.99% APR APR for 10, 15, 20, and 30-year terms.
Discover Credit Cards
Discover’s credit cards are the company’s most popular product.
There are no annual fees on any card, and while Discover’s cards are best-known for offering cash back, you can also earn travel rewards and other benefits.
Here’s a look at Discover’s top cards:
1. Discover it Cash Back Credit Card
Discover’s It Cash Back Card is Discover’s flagship credit card that pays up to 5% cash back rewards on your everyday purchases (up to the quarterly maximum of $1,500). After that, you’ll earn an unlimited 1% cash back on all other purchases.
2. Discover Travel Credit Card
The Discover Travel Credit Card pays 1.5x miles for every dollar spent on all purchases. This card is unique in that there’s no annual fee. (Most travel rewards cards come with an annual fee). That said, Discover Travel Credit Card stands out for frequent travelers that want to avoid credit card fees.
3. Discover Gas & Restaurants Credit Card
The Discover Gas & Restaurants Credit Card pays2% cash back on up to $1,000 of purchases at restaurants and gas stations. You can also earn an unlimited 1% cash back on all other purchases.
4. Discover Secured Credit Card
The Discover Secured Credit Card is designed for individuals with a below-average credit score, or who are looking to rebuild their credit. This card pays 2% cash back on up to $1,000 in purchases at restaurants and stations.
You can also earn an unlimited 1% cash back on all other purchases. But, because this is a secured credit card, you will have to put down a refundable security deposit to open up an account.
5. Discover Student Cash Back Credit Card
The Discover Student Cash Back Credit Card pays 5% cash back on everyday purchases up to the quarterly maximum, and an unlimited 1% cash back on all other purchases. Discover also offers a Good Grade Reward, that pays students a $20 statement credit if their GPA is 3.0 or better.
When it comes to credit cards for students, this one is hard to beat.
6. Discover Student Chrome Credit Card
The Discover Student Chrome Credit card pays 2% cash back on up to $1,000 in purchases at restaurants and gas stations, and an unlimited 1% cash back on all other purchases. Good students that achieve a 3.0 GPA or higher can also earn a $20 in statement credit..
7. Discover NHL Credit Card
The Discover NHL Credit Card pays 5% cash back on everyday purchases in different categories each quarter, up to the quarterly maximum. After that, you can earn an unlimited 1% cash back on all other purchases.
But, why is it called the Discover NHL Card? The card comes in the design of 31 NHL teams, making it a favorite for die-hard hockey fans. You know you’re out there!
8. Discover Business Credit Card
The Discover Business Credit Card pays an unlimited 1.5% cash back on all purchases. With no annual fee, this card might be a good option for small business owners that want to earn a little something extra from everyday business spending.
Discover Bank Features
Here are some of the top features that you can expect from Discover Bank.
- Online Banking: Discover Bank is entirely an online bank. There’s nothing you can’t do from Discover’s website or mobile app, as both platforms offer a full suite of online and mobile banking products.
- Discover Mobile: Discover Mobile is Discover Bank’s mobile app, and it’s very well rated at 4.9 stars (out of 5) in the App Store and at 4.5 stars (out of 5) in the Google Play Store. Some helpful app features include mobile check deposit, and being able to locate your nearest free ATM right from within the app.
- Zelle: With a Discover Bank account, you can quickly and securely transfer money via Zelle.
- No Annual Fees: One of Discover Bank’s top selling points is that there are no annual fees on checking accounts, savings accounts, or credit cards. Most big national banks charge fees for these types of services, giving Discover an edge in the fees category.
- 60,000+ No Fee ATMs: As a Discover Bank customer, you’ll have access to a huge network of no-fee ATMs, which makes it easy to take money out from your checking account, savings account, or money market account whenever you need to.
Setting up an account with Discover Bank is very straightforward. You don’t even need to call them because you can quickly get everything done online.
When you access the Discover website, click on the orange Open an Account button, and select the account you wish to open.
Then, confirm whether you’re new to Discover or a current customer.
From there, simply follow the sign-up instructions, and your application should be complete in just a few minutes.
If you have any questions, you can give them a call at 1-800-347-7000.
Discover Bank Promotions
Here are some of the best Discover Bank promotions going on right now:
1. Online Savings Account - up to $200 bonus
Expires: June 15, 2022
Discover – one of our top picks for online banks – is currently offering up to $200 for opening a new Online Savings account. You'll need to deposit $25,000 to earn the full amount, but $15,000 only results in a loss of $50.
One perk to this bonus is that Discover doesn't have a requirement for how long you need to keep the cash in the account, so you can deposit and withdraw immediately. Doesn't get much easier than that!
How to earn the bonus
The Online Savings Account sign up offer requires you to deposit and maintain a minimum balance in order to earn the $200 bonus. Full requirements to receive this bonus are:
- Open a new Discover Online Savings Account using promo code "BP222" at the link below.
- Within 30 days, deposit $15,000 to earn $150 or $25,000 to earn $200.
- Bonus will be credited to your account within 30 days of qualifying for the bonus.
2. Cashback Debit - up to $360 bonus
Expires: Limited Time
Discover Bank has a cool twist on the old-fashioned debit card: cash back rewards. Open an account online, and they'll give you 1% cash back on up to $3,000 in debit card purchases each month, for up to $360 each year as a bonus to your normal spending. See website for details.
How to earn the bonus
The Cashback Debit sign up offer requires you to make purchases using the account's card in order to earn the $360 bonus. Full requirements to receive this bonus are:
- Open a new Discover Cashback Debit checking account using the link below.
- Use your debit card to earn cashback – up to $30 can be earned per month (see website for details).
- Bonus cash will be deposited into your account each month.
3. Discover it® Credit Card - Cash Back Match bonus
Expires: Limited Time
The Discover it® Cash Back and Chrome credit cards offer new cardholders a bonus 2X "Cashback Match" on all cash back earned in the first year. This means that if you earned $150 in cash back, they'll give you an additional $150, automatically.
This is in addition to the 0% intro APR that both cards offer for the first 14 months.
How to earn the bonus
The Discover it® Credit Card sign up offer requires you to make purchases using the account's card in order to earn the Cash Back Match bonus. Full requirements to receive this bonus are:
- Apply for a new Discover it® Cash Back or Discover it® Chrome credit card using the link below.
- For the first year, use your credit card to earn cash back: for Discover it® Cash Back, you'll earn 5% in rotating categories, 1% on everything else; for Discover it® Chrome, you'll earn 2% at gas stations and restaurants, 1% on everything else.
- After 12 consecutive billing cycles, bonus cash will be credited to your rewards account within 2 billing cycles.
Discover Bank Security
Discover Bank is FDIC-insured, which means that deposits are protected up to $250,000. As an online financial service, the bank takes cybersecurity seriously.
The bank uses leading Secure Socket Layer (SSL) encryption technology and enhanced account verification to keep your data safe, among other security measures.
Discover also constantly monitors for fraud and sends alerts if there’s anything strange going on with your account.
Customer Service and Support
Discover Bank offers 24/7 U.S.-based phone support, so it’s easy to speak with someone whenever you need help.
If you’re not in the mood to call in, you can also send and receive customer support messages right from the Discover Mobile app.
Overall, Discover Bank seems to have a pretty solid reputation for customer service.T
here are some disgruntled customers out there (which you can read about on TrustPilot) but you can expect to find this with any bank that services millions of customers.
Pros and Cons
Now that you’re up to speed with all of Discover Bank’s products and services, let’s take a look at some of the pros and cons of joining this bank.
- No annual fees
- Competitive interest rates on savings and money market accounts
- Excellent online banking experience
- Great for students
- Solid credit card portfolio
- No brick and mortar banks
- Not the best sign-up bonuses
Alternatives to Discover Bank
When it comes to online banks, some of the main alternatives to Discover Bank are:
Frequently Asked Questions
Is Discover Bank a real bank?
Yes, Discover Bank is a real bank. Even though they don’t have physical branches, Discover Bank is an online bank and financial institution with tens of thousands of employees.
Is the Discover app safe?
Yes, the Discover Mobile app is safe to use and features SSL encryption technology, which makes it virtually impossible for someone to get a hold of your information.
Is Discover Bank federally insured?
Yes, Discover Bank is FDIC-insured, so your deposits are protected up to $250,000.
Is Discover Bank Right for You?
The bottom line is that if you want to avoid fees, and have all of your banking products in one place, Discover Bank might be just what you’re looking for.
The bank also offers competitive rates, with a 0.50% APY on savings accounts, putting it up there among the top-ranking options.
On the flip side, if you are the type of person that wants to develop a face-to-face experience with your banker, then you should probably look into a big national bank that has thousands of brick and mortar locations.
At the end of the day, it all comes down to what you want and expect from your bank. Once you can answer that, the choice will be more obvious.