Deal Summary: Online Savings Account, 1.01% APY, No minimum balance
Today Discover Bank increased the rate of its Savings Account from 0.95% to 1.01% APY. While this isn’t an exceptional rate for an online savings account, it’s another sign that banks are slowly starting to respond to the Fed rate hikes. Discover Bank is one of the big internet banks, and it’s always nice to see rate hikes at these banks.
The 1.01% 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.
|1.01%||-||-||Discover Bank||Online Savings|
|0.90*%||$100k||-||Discover Bank||Money Market|
|OTHER TIERS: 0.85% → 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 this latest increase, the APY had been at 0.95% since June 2015.
The Discover Money Market Account also had a rate increase. The top-tier rate increased from 0.85% to 0.90% APY. This requires a minimum balance of $100k. Smaller balances earn 0.85% (up from 0.80%). 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.
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.
Discover Bank Affinity Groups
AAA members used to be able to get an extra 5 basis points (bps) on all Discover Bank products. That is no longer the case now that AAA banking products are offered by Auto Club Trust, FSB. However, 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 1.06%).
Discover Savings Account Bonus
If you’re considering opening the Discover Savings Account, Discover often offers a $100 sign-up bonus with a $15k deposit. There is currently an active bonus, which I described in this bonus review. Note, Discover is also offering a $100 bonus when AAII members open an AAII Discover savings account with a $15k deposit.
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).
Discover Bank has an overall health grade of "A" at DepositAccounts.com, with a Texas ratio of 6.50% (excellent) based on December 31, 2016 data. In the past year, Discover Bank has increased its total non-brokered deposits by $4.79 billion, an excellent annual growth rate of 16.53%. 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 257 nationally-available savings accounts from banks and credit unions tracked by DepositAccounts.com,, 10 banks and one credit union offer higher rates for deposits of $2k. The table below shows how the Discover savings account compares with three of the top nationally-available savings accounts:
The above rates are accurate as of 4/26/2017.