Deal Summary: Rate increases: Online Savings Account, 1.30% APY, No minimum balance: Money Market, 1.20% APY $100k+, 1.15% under $100k
Today Discover Bank increased the APY of its Online Savings Account from 1.20% to 1.30%. While this new rate isn’t exceptional for an online savings account, it shows that competition among internet banks continues to push rates upward. Discover now joins other big internet banks such as Synchrony and Barclays with a 1.30% savings account. Next week’s expected Fed rate hike may have contributed to Discover’s decision. Last June, Discover hiked its rates just a week before the June Fed rate hike.
|1.30%||-||-||Discover Bank||Online Savings|
|1.20*%||$100k||-||Discover Bank||Money Market|
|OTHER TIERS: 1.15% → Up to $100k|
The 1.30% APY applies to all balances. In March, Discover Bank removed the $500 minimum deposit requirement for opening the savings account. Now the Discover Savings Account has no minimum opening deposit. Plus, it has no monthly maintenance fees.
In addition to the Online Savings Account, Discover increased the rates on its Money Market Account. For balances of at least $100k, the APY increased from 1.10% to 1.20%, and for balances under $100k, the APY increased from 1.05% to 1.15%. Unlike the savings account, the money market account has a minimum opening deposit of $2,500, and a minimum balance requirement of $2,500 to avoid a $10 fee for each statement cycle. The advantage of the money market account over the savings account is access to your money with checks and with a debit/ATM card.
The last time Discover Bank was offering a rate this high on its savings account was October 2010 when the APY was 1.35%. The lowest rate was in 2012 and 2013 when the savings account rate was 0.80%. The rate slowly went up for the next three years. This was the first year that we’ve seen steady increases. It started in April when the APY increased to 1.01%. Discover then followed with rate increases in June, August, October and then today.
One important feature of an internet bank is its ACH bank-to-bank funds transfer service. Discover Bank does allow large ACH transfers to be initiated from its online account center. According to the Account Center Banking agreement, the incoming and outgoing limit is $250,000 per 30-day rolling period with a combined incoming/outgoing limit of $300,000 per 30-day rolling period.
Thanks to DA reader, Buckeye61, for his Forum post about these rate increases.
Higher Savings Account Rate for AAII Members
Discover Bank still has an agreement with the American Association of Individual Investors (AAII). AAII members still receive a 5-bps rate bonus on all products (the Online Savings Account APY is now 1.35%, and the top APY of the Money Market Account is 1.25%).
Discover Bank used to have a similar agreement with AAA. However, recent rate bonuses only applied to certain CDs. I can no longer find the AAA webpage that mentions Discover Bank. It appears AAA is moving to a different bank, Auto Club Trust, FSB, to offer banking products to its members.
Savings Account Bonus
Discover Bank has regularly offered a bonus for new customers who open a savings account and deposit the required amount. The latest bonus offers up to $200 for a $25k deposit. For more details, please refer to this blog post.
Headquartered in Greenwood, Delaware, Discover Bank is an internet bank with no brick-and-mortar branches. To qualify to open an account of any kind with Discover Bank,
each Account owner must be a U.S. citizen or other U.S. person, be at least 18 years old, have a valid Taxpayer Identification Number, have a valid physical U.S. address and provide an electronic consent and signature.
Applying for the Discover Savings Account must done online or by phone (1-800-347-7000). If you’re an AAII member, make sure to use Discover Bank’s webpages specifically set up for these organizations.
Discover Bank has an overall health grade of "A" at DepositAccounts.com, with a Texas ratio of 6.65% (excellent) based on September 30, 2017 data. In the past year, Discover Bank has increased its total non-brokered deposits by $3.48 billion, an excellent annual growth rate of 10.51%. Please refer to our financial overview of Discover Bank (FDIC Certificate # 5649) for more details.
As one of the largest financial services firm in the country, Discover Bank traces its roots back to the Greenwood Trust Company, which was established in 1911. Discover Bank came into being following the purchase of the Greenwood Trust Company in 2000. Today, Discover Bank has assets in excess of $96 billion.
How Discover Bank’s Online Savings Account Compares
When compared to 204 nationally-available savings accounts from banks and credit unions tracked by DepositAccounts.com,, 5 banks offer higher rates for deposits of $2k. The table below shows how the Discover savings account compares with a sample of the top nationally-available savings accounts:
|Interest Rate||Account Name||Credit Union/Bank|
|1.50% APY||Dollar Savings Account (no min)||DollarSavingsDirect|
|1.45% APY||Savings Account (no min/$5M max)||Live Oak Bank|
|1.35% APY||Premier High Yield Savings Account (no min/$250k max)||CIT Bank|
|1.30% APY||Online Savings Account (no min)||Discover Bank|
The above rates are accurate as of 12/7/2017.