Discover® Bank Online Savings Account Review
Interested in opening a savings account at Discover® Bank? Read this article first. You may know Discover® for their credit cards, but they have an impressive suite of banking products, from online savings and checking accounts to retirement accounts. Keep reading for a full description of how to open an account and our review of using Discover® Bank.
Why Open a Discover® Bank Online Savings Account
If you’re thinking about setting up an online savings account, it’s probably because you’ve heard online banks offer better interest rates than traditional brick-and-mortar. And you’re right. You’re also probably looking at saving up for a worthy goal–like building up your emergency fund, getting enough cash for a down payment on a house, or buying a new car. For goals like these where you want your money to still work for you (i.e., to make money from interest!), you need to be able to access it in a pinch, and you don’t want to risk losing money because of a sudden downturn in the market, online savings accounts are great.
But before we get to how to set up an account, let’s go over some basics. Deposits at Discover® Bank are insured by the FDIC and the bank has earned a five-star “Safe & Sound” rating from Bankrate. FDIC insurance alone, regardless of the five-star rating, ensures that regardless of the solvency of the bank, I will be able to withdraw my full deposit when needed.
One of the reasons I like Discover® Savings Accounts is because they are free–there’s no monthly fee and no minimum balance required. Plus, you’re not required to set up an ongoing direct deposit. The only fees you would have to pay with this account is if you wired money – there’s a $30 service charge for outgoing wire fees. Since I’d planned to use this account to save and not send wire transfers, the fee for something I didn’t plan to use wasn’t nearly as big of a deal as the fact it didn’t have fees for everything else (but obviously you’ll need to assess your personal situation).
- High APY, even with smaller balances (many banks require you to have a significant balance before getting the higher APY rates)
- No fees
- Great mobile app (necessary for an online bank)
- FDIC insured
- Limited branches (though how much of a con this is really depends on whether you like going to a physical bank and waiting in line – I don’t so this isn’t a big issue for me).
- No debit card for easy cash withdrawals
How to Open a Discover® Bank Online Savings Account
Since Discover® is an online bank, you’ll open your account online. It’s a quick and easy process and you won’t need to collect a bunch of documents to begin.
I decided to open a savings account. But Discover® Bank also offers:
- FDIC-insured Certificates of Deposit (CDs) accounts with 3 month to 120 month terms
- Money Market Accounts
- IRA Savings Accounts (both Roth IRA and Traditional IRA options)
- IRA Certificate of Deposit (CDs) with 3 month to 120 month terms
- Checking Accounts (more on why it might be a good idea to combine your Discover® online savings account with their checking account later)
Step 1. Basic Details
On their website, I clicked on Savings Account (though if you aren’t sure what kind of account is best for your needs, there’s a handy quiz on their site). I started by giving some basic details–just as I would with any bank–including my name, my address (inside the United States), my date of birth, and my Social Security number.
They also ask for information on my employment status, my yearly income, and my country of citizenship.
Next, they asked if I wanted to add a joint owner to the account. This is great if you want to save with your partner or anyone else. If you aren’t sure or don’t have all their relevant details, you can always do this later.
Step 2. Fund the Account
The second step of the application is all about funding the account. I decided to link the account to my Capital One 360 checking account with an initial deposit of $2,500, which I funded electronically.
Discover® Bank does not require a minimum for the initial deposit, which is fantastic as you can set it up with whatever you have and commit yourself to saving more.
If you prefer to fund your account via a wire or check, Discover® Bank offers these options as well. In order to give your consent to Discover® Bank to perform an ACH transfer, you will need to provide an electronic signature.
Step 3. E-Sign
In the last step, I verified the information I provided, electronically signed the tax certification, and agreed to electronic communications.
Banks are required to keep account owner signatures on file and Discover® Bank handled this electronically as well.
Step 4. Set Up Security
Once the bank processed my application, I was asked a number of security questions based on the information in my credit report. Many websites use this type of authentication. For example, you may be asked to select the town where you lived previously from a list of choices.
Important Note: On the confirmation page, you will see your full account number. Save this information by printing the page or jotting the number down now because you will need your account number later in order to activate your online access. The bank will not send it to you through email, and it will take up to ten days to receive your welcome package in the mail.
After passing the security and identity check, I received an email confirming the creation of my new account, including a partially-hidden account number. Those who decide to fund their new account via check will receive the bank’s depository addresses for regular U.S. mail or overnight mail in this email.
Interestingly (and one of the only downsides I’ve found with my Discover® account) is that wire transfers are processed through Mellon Bank rather than being sent directly to Discover® Bank. This means it’s a bit more of a hassle to set up wire transfers, but it’s not a big enough deal that I’d switch accounts (especially since the APY on this account is competitive).Banking Deal: Earn 1.40% APY on an FDIC-insured money market account at CIT Bank.
Using the Discover® Bank Online Savings Account
A day after receiving the first email, I got a second email that confirmed my account was funded. That was faster than I’d expected, considering I started the process over a weekend. The email included a link to Discover’s website where I registered my new account online. After verifying this email was legitimate and not a phishing attempt (which you should always do to stay safe), I followed the instructions.
Did you save your account number, like I warned you about? If not, you will need to call the Bank’s customer service. You need the account number, your Social Security number, your date of birth, and your mother’s maiden name in order to activate online account access.
After selecting a user ID, a password, and security questions, I was able to view my account online. I was surprised to see Discover® had already posted interest to my account. You can see how much I received for one day in the screen shot included here.
You can use the Discover® Bank website to set up recurring transfers through their “Automated Saving Plan” or initiate a one-time transfer from a linked account. If you want to link a new account, you will be asked to enter the banking information and required to verify small trial deposit amounts. Unfortunately, the account I used for the initial deposit is not automatically considered a linked account. I must go through the process of adding the same account to the list.
Discover® Bank Savings and CD Rates
Discover® Bank offers three terrific deposit accounts for every customer. And their rates are also some of the best you can find online.
- Online Savings Account – 3.30% APY
- High Yield CD’s – 4.25% APY (for a 12 month CD) – 4.30% APY (for a five year CD)
- Money Market – 3.20% APY (for balances less than $100,000) – 3.25% APY for balances greater
My Experience with Discover® Bank Online Savings Account
I’ve loved my Discover® savings account – I like checking the interest I make every month on my emergency fund. The app is easy to use. If I get an unexpected check in the mail, I can easily use the app to deposit it directly into my account.
I’ve taken advantage of Discover’s checking account to make the whole thing work a bit better for me. You won’t get a debit card to use at ATMs with your savings account, so when you want to access your money, you’ll need to move it into another account or send a check. (This isn’t unusual – after all, you’re using this account to save, not pay your monthly bills). This hasn’t been an issue for me since I have a checking account with Discover® that gives me free ATM withdrawals across the country. If I need to take out money from my savings account, I can use the app to quickly transfer money from savings to checking and then withdraw it at the nearest ATM. I don’t see a real drawback to setting up a checking account since it’s free.
Alternatively, Discover’s money market account (which has lower interest rates, but still higher than what you’d find at a typical bank) has limit-free ATM withdrawals.
If not having a debit card with your savings account is a dealbreaker for you, then you’ll want to look at some alternatives.
But what if you don’t want to set up either a savings account or money market account (both come with use of the extensive ATM network) – how do you get your money out? You can withdraw funds with:
- A wire transfer (remember these will incur a $30 service fee, so I’d recommend against using this option)
- Official bank check
- Online transfers to external bank accounts
- Transfer to other Discover accounts (I’ve found this to be the easiest and fastest option – your money moves immediately, so you can do this on your smartphone’s app while walking up to the ATM machine and have the cash ready to withdraw from another account in seconds).
The process of opening a Discover® Bank online savings account was smooth and quick. When I called Discover’s customer service to get my account number, the representative was helpful and friendly. My call, placed on a Sunday afternoon, was answered without any hold time. Discover® Bank’s features are basic, but it meets the needs of savers with the bonus of a highly competitive interest rate. I plan on taking a closer look at the bank’s high-yield CDs in the near future. After some time using it, I haven’t had any problems with my Discover® Bank. To open an account visit Discover® Bank.
|Routing (ABA) number||031100649|
|Established||August 30, 1911|
|Location||12 Read's Way, New Castle, Delaware|
|Direct Connect||Not supported|