Deal Summary: Rate increases: Online Savings Account, 1.10% APY, No minimum balance: Money Market, 1.01% APY $100k+, 0.95% under $100k
Today Discover Bank increased the APY of its Savings Account from 1.01% to 1.10%. This is just 43 days since Discover increased the APY from 0.95% to 1.01%. While this new rate isn’t exceptional for an online savings account, it shows that competition among internet banks is heating up as they all start responding to the Fed rate hikes. This latest rate increase by Discover may be an early move in anticipation of next week’s Fed rate hike that’s widely expected to take place.
The 1.10% 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 0.90% to 1.01%, and for balances under $100k, the APY increased from 0.85% to 0.95%. 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.
|1.15%||-||-||Discover Bank||Online Savings|
|1.01*%||$100k||-||Discover Bank||Money Market|
|OTHER TIERS: 0.95% → Up to $100k|
The last time Discover Bank was offering a rate this high on its savings account was September 2011 when the APY was 1.10%. The lowest rate was in 2012 and 2013 when the savings account rate was 0.80%. The rate increased 5 basis points in 2013, in 2014 and in 2015. Before the April rate increase, the APY had been at 0.95% since June 2015.
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.
Bonus for AAA Members
If you’re an AAA member, there’s an additional reason to open a Discover Online Savings Account. AAA members qualify for a $100 bonus. Details are listed in this AAA section of Discover Bank’s website. The rates and other features are the same as Discover Bank’s standard Online Savings Account. Below are the details of the bonus that are listed in the small print of the AAA/Discover Bank website:
- Apply for your first AAA Online Savings Account from Discover Bank by 6/30/17.
- Enter Offer Code AAA100 when applying.
- Deposit at least $15k by 7/14/17.
- Bonus will be credited to the account by 7/28/17 if requirements are met.
I spoke with a Discover Bank CSR, and I was told that all AAA members anywhere in the U.S. are eligible for this bonus. The small print says that the offer is not valid for existing or prior AAA savings customers. I asked the CSR if someone who already had the standard Discover Bank Online Savings Account would be eligible for the bonus. According to the CSR, they are eligible. The standard Discover Bank Online Savings Account does not disqualify you for this bonus. Only the AAA savings account that’s opened through AAA disqualifies you for this bonus.
In addition to the bonus, AAA members have access to CDs with rates that can be around 5 basis points higher than the standard Discover Bank CDs. Not all CDs have higher rates. A few examples of CDs that do have higher rates are shown below:
- 12-month CD: 1.40% APY (AAA members), 1.35% APY (standard accounts)
- 24-month CD: 1.55% APY (AAA members), 1.50% APY (standard accounts)
- 60-month CD: 2.31% APY (AAA members), 2.25% APY (standard accounts)
When you apply for these AAA accounts, you’ll need to enter your AAA membership ID and club code in the application.
In April I had thought Discover had discontinued its relationship with AAA. The reason is that for the FL/GA/TN region, AAA’s website links to the bank, Auto Club Trust, FSB. This bank offers different products and rates than what Discover Bank offers.
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 1.15%, and the top APY of the Money Market Account is 1.06%).
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 AAA or 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 6.61% (excellent) based on March 31, 2017 data. In the past year, Discover Bank has increased its total non-brokered deposits by $4.85 billion, an excellent annual growth rate of 15.74%. 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 $91 billion and more than 415,000 ATMs spread across the United States.
How Discover Bank’s Online Savings Account Compares
When compared to 207 nationally-available savings accounts from banks and credit unions tracked by DepositAccounts.com,, 9 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:
The above rates are accurate as of 6/9/2017.