Written by Ali Cybulski, Published on 6/14/2024
Discover® Bank, a federally insured institution owned and operated by Discover Financial Services, offers online and mobile banking for a suite of deposit products. The bank has a checking account, savings account and money market account as well as a certificate of deposit (CD) and individual retirement accounts (IRAs).
The online bank promotes no monthly fees on any account and no insufficient funds or overdraft fees on checking, savings and money market accounts. In addition, customer service is available 24/7 at 800-347-7000.
A Discover Cashback Debit account earns 1% cash back on up to $3,000 in debit card purchases monthly. The account comes with access to more than 60,000 no-fee ATMs and fee-free overdraft protection. Other perks: You can get your paycheck up to two days early when you enroll in direct deposit, and you won’t pay for check reorders or expedited delivery of a replacement debit card.
The bank’s high-yield Online Savings Account earns an annual percentage yield (APY) of 4.25% as of June 7, 2024, and requires no minimum deposit. You won’t be charged for stop payments, returned items or excessive withdrawals.
A Money Market Account earns 4.00% APY for balances of less than $100,000 and 4.05% APY for balances of $100,000 or more as of June 7, 2024. The account features no minimum opening deposit and no fees for online bill pay or standard checks, returned items, excessive withdrawals and insufficient funds.
CDs come in terms from three months to 10 years, with a minimum initial opening deposit of $2,500. The 12-month CD earns a 4.70% APY as of June 7, 2024. Keep in mind that all CDs have early withdrawal penalties based on term length if you need to access your cash early.
Discover Bank also offers IRA CDs with terms from three months to 10 years and a minimum initial deposit of $2,500. Choose from traditional or Roth IRAs, or you can have both. Early withdrawal penalties apply, and the penalty depends on your CD’s term.
Discover Bank pros and cons
Pros:
• Cash back on debit card purchases
• Competitive rates
• No fees on deposit products
Cons:
• Steep $2,500 minimum to open CDs
• No branches for in-person service
• Limited account options
A Good Credit Card And Online Savings Account
I'm very happy with my Discover Card and their online savings account, which has a very competitive rate. The only drawback to what I use with them is the lack of interest on their checking accounts. But overall, I've found Discover good for both credit cards and savings accounts.
Snagged A 4.4% APY
Grabbed $250K worth of 4.4% APY 10 year on 1/18/23. Sleep like a baby!
Nasty Change To Bill Pay
Discover Bank just made a nasty change to their Bill Pay. A new rule prohibits scheduling a payment for more than the current balance in my checking account. I have always entered bill payments as soon as I get a bill, scheduling them for the due date, and transferred money out of savings a day or 2 before to cover them. Now I have to either transfer the funds into checking when I get the bills (losing interest), or wait until a couple of days before the due date and hope that I remember to schedule the payment and that nothing prevents me from accessing my account. I've been happy with Discover for 3 years, but this bone-headed change cramps my style & really irritates me.
Don't Do Business With This Bank
I sent two separate ACH contributions to my Roth IRA on 01/24/2025. Immediately after submitting the contributions I discovered that I was not legally able to submit any funds to my Roth IRA for 2024 and 2025 and contacted Discover to see if the transactions could be stopped but was told that they couldn't. I advised Discover that these payments were considered excess contributions and was told by a Discover agent to submit two separate "IRA Distribution Form for Traditional, Roth, and SIMPLE IRAs" forms and to complete the "Correction of Excess Contribution for Tax Year" section of the form for 2024 and 2025. I was told that after the funds posted that I would immediately be sent the funds. I was told this by at least two different agents. On 02/05/2025 I received a phone call from another agent who told me that Discover wouldn't be able to return my funds for 60 days and that they would not honor my requests to return the excess funds until the 61st day after the deposits were made. The person I spoke to made it sound like it was a government rule but after doing some research I discovered that there was no such rule. I contacted Discover again and asked for the IRS rule that says that they couldn't return my funds for 60 days and was told that it wasn't due to a government rule but it was their policy. When I asked for them to send me the exact policy or where I can find it to read it for myself, I was given some vague reference to their deposit agreement that was available on their website but when I read the agreement it is silent on an policy that says that they can keep my funds for 60 days. If I ask for my money back they have no right to keep it if the funds have been validated and are legitimate. Do not do business with this bank.
Update:
Be aware that Discover will, not possibly, but will not let you withdraw funds that were deposited into your IRA Savings account for 61 days. This is currently their internal policy that has not previously been told to customers until recently but they are enforcing despite this fact not being previously disclosed in writing in their Deposit Account Agreement. As you can see below (1) they just put this in their Deposit Account Agreement that they claim won't be effective until April 19, 2025 but they are and have been actively enforcing without customer agreement. I opened my account several years ago so this should not have applied to my deposits since it was not specifically in the Deposit Account Agreement that was in effect when I opened the account. They continue to refer to a vague section of the existing Deposit Account Agreement and I was told by several agents "After reviewing what you have stated it is in our account agreement when opening the account. You can locate it on our website under forms and documents Page 18. The 60 day rule does apply to all distributions even IRA OSA and all new funds put into an IRA even if the account has been established for a long time. It applies to all new funds. This is a business decision made by Discover Bank." As you can see Discover has not even made this "policy" effective or known to their customers until a future date. Do not do any business with this bank. You have been warned.
(1)
Important Changes to the Discover® Deposit Account Agreement
Effective April 19, 2025, the following will be added to the Deposit Account Agreement:
Section 15 (f): Funds Availability (Holds), IRA Savings Accounts: Any deposit made to your
IRA Savings Account (for example, by check or ACH transfers initiated at Discover Bank)
may not be available for withdrawal until 60 days after the deposit date; except for required minimum distributions and revocations of IRA plan.
Data as of Q4 2024
Learn why bank health mattersHealth Grade Components
| Overall | |
|---|---|
| FDIC Certificate # | 5649 |
| Year Established | 1911 |
| Employees | 12810 |
| Primary Regulator | FDIC |
| Profit Margin | |
|---|---|
| Return on Assets - YTD | 2.95% |
| Return on Equity - YTD | 32.06% |
| Annual Interest Income | $20.64B |
| Assets and Liabilities | ||
|---|---|---|
| Assets | Q4 2024vs Q4 2023 | $145.5B$149.5B |
| Loans | Q4 2024vs Q4 2023 | $112.8B$119.1B |
| Deposits | Q4 2024vs Q4 2023 | $112.5B$112.6B |
| Equity Capital | Q4 2024vs Q4 2023 | $14.02B$12.34B |
| Loan Loss Allowance | Q4 2024vs Q4 2023 | $8.32B$9.28B |
| Unbacked Noncurrent Loans | Q4 2024vs Q4 2023 | $2.3B$2.26B |
| Real Estate Owned | Q4 2024vs Q4 2023 | $402K$345K |