Discover Bank Ups Online Savings, Money Market and CD Rates

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Deal Summary: Online Savings, 1.75% APY, all balances. Money Market, 1.65% APY ($100k+), 1.60% APY (below $100k).

Availability: Nationwide (internet bank)

Discover Bank is the latest of the large internet banks to raise their savings account rate to 1.75% APY. Discover Bank’s Online Savings Account rate increased 10 bps this morning to 1.75% APY. In addition, it raised the rates by 10 bps of both tiers of its Money Market Account. The top tier now earns 1.65% APY ($100k+) and the lower tier earns 1.60% APY (below $100k). Lastly, several CD rates were increased. Rate gains ranged from 5 bps to 15 bps. The rate gains weren’t enough to make any of the CDs competitive with the rate leaders.

Online Savings Account

The Online Savings account now earns 1.75% APY on all balances. Several other large internet banks have already raised their no-minimum savings account rates to 1.75% APY. These include Ally, American Express, Barclays and Synchrony. So Discover is a little behind.

APYMINMAXINSTITUTIONPRODUCTDETAILS
1.80%--Discover BankOnline Savings
Rates as of September 25, 2018.

Discover’s Online Savings has a long history. DA began tracking it in 2009 when it had an APY of 1.85%. By 2010, the APY had fallen to 1.60%, and the rate continued its gradual decline until it finally settled at 0.80% in April 2012. With four modest rate increases (totaling only 15 bps) over the next five years, the Online Savings APY finally started to climb in June 2017. In the past year, the Online Savings has added 74 bps.

More than a year ago, Discover Bank removed the $500 minimum opening deposit requirement for the Online Savings account, which can now be opened with any amount. It also has no monthly maintenance fee or minimum balance fee, but there is an Excessive Withdrawal Fee of $15 per withdrawal beyond the six allowed per month.

Thanks to DA reader, Maecl, for his continuing Forum posts, including today’s post about the Online Savings rate increase.

Savings Account Bonus

Discover Bank has been regularly offering a bonus for new customers who open an Online Savings Account and meet specific deposit requirements. The bonus recently expired on June 29th, but I expect to see it back soon. The bonus had been either $150 or $200 for deposits of $15k or $25k, respectively. Once this bonus returns, you’ll be able to find the details in this blog post.

Money Market

Discover Bank’s Money Market account has two new tiered rates: 1.65% APY for balances of $100k and above, and 1.60% for balances below $100k.

APYMINMAXINSTITUTIONPRODUCTDETAILS
1.70*%$100k-Discover BankMoney Market
OTHER TIERS: 1.65% Up to $100k
Rates as of September 25, 2018.

Unlike the Online Savings, the Money Market account requires a minimum opening deposit of $2.5k. There is also a minimum balance requirement of $2.5k to avoid a $10 fee per each statement cycle.

Must have an average daily balance of at least $2,500 beginning on the third
statement cycle; otherwise, a monthly minimum balance fee will be charged.

The advantage of the Money Market account over the Online Savings account is quite simple: access to your money, using checks and/or a debit/ATM card. Standard checks are free (both the initial order and re-orders), and there’s fee-free access to more than 60,000 ATMs throughout the U.S. Like the Online Savings account, the Excessive Withdrawal Fee (EWF) of $15 per withdrawal beyond the six permitted per month applies, but the EWF does not apply to ATM withdrawals.

First Fee Forgiveness Program

As stated in both the Online Savings Account Guide and Money Market Account Guide,

In each calendar year (January 1 through December 31), the first eligible fee charged to
your Money Market Account will be automatically waived and credited to your account. Excessive Withdrawal, Insufficient Funds, Stop Payment, and Money Market Minimum Balance fees are eligible for the first fee forgiveness program. Wire transfer fees are not eligible, and will not be waived even if they are the first fee on an account in a calendar year.

Discover Bank’s ACH Transfer Features

ACH bank-to-bank funds transfer service can be a deal maker or breaker for opening an account at an internet bank. Discover Bank does allow large ACH transfers to be initiated from its online account center. According to the Account Center Banking agreement,

  • Incoming limit is $250,000 per 30-day rolling period for each Account Center registered owner.
  • Outgoing limit is $250,000 per 30-day rolling period for each Account Center registered owner.
  • The limits above are subject to a combined incoming/outgoing limit of $300,000 per 30-day rolling period for each Account Center registered owner.
  • Discover Bank’s CD Rates

    Discover Bank increased several of its CD and IRA CD rates. Rates for terms of 18 months to 10 years increased 5 to 15 bps. The gains weren’t enough to make them competitive with the rate leaders.

    APYMINMAXINSTITUTIONPRODUCTDETAILS
    3.10%$2.5k-Discover Bank10 Year CD
    3.05%$2.5k-Discover Bank7 Year CD
    3.00%$2.5k-Discover Bank5 Year CD
    2.70%$2.5k-Discover Bank4 Year CD
    2.65%$2.5k-Discover Bank3 Year CD
    2.60%$2.5k-Discover Bank24 Month CD
    2.60%$2.5k-Discover Bank30 Month CD
    2.55%$2.5k-Discover Bank18 Month CD
    Rates as of September 25, 2018.

    The minimum opening deposit for any of Discover Bank’s CDs is $2.5k, with no balance cap. The CDs are also available as IRAs (Traditional and Roth) earning the same APYs and with the same funding requirements. According to Discover’s FAQs, “account ownership types including Trust, Custodial, Guardian, and Estates.”

    Discover Bank’s long-term CDs opened or renewed before 3/15/2013 had fairly small early withdrawal penalties (EWPs). Those penalties have increased twice, and now the CDs with terms from 5 to 10 years have hefty penalties. The current EWPs are as follows:

    Less than 1 year: 3 months simple interest
    1 year to < 4 years: 6 months simple interest
    4 years to < 5 years: 9 months simple interest
    5 years to < 7 years: 18 months simple interest
    7+ years: 24 months simple interest

    Higher Rates for AAII Members

    Discover Bank's agreement with the American Association of Individual Investors (AAII) is still in effect. AAII members receive a 5 bps rate bonus on all products, with the Online Savings earning 1.80% APY and Money Market Account offering 1.70% APY and 1.65% APY.

    Discover Bank used to have a similar nationwide agreement with AAA. Some AAA regions may still list Discover Bank, but my region (Florida, Georgia, and Tennessee) now only lists products from Auto Club Trust, FSB.

    Availability

    Headquartered in Greenwood, Delaware, Discover Bank is a “pure” internet bank, having 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 Online Savings and/or Money Market accounts must done online or by phone (1-800-347-7000). If you’re an AAII member, make sure to use Discover Bank’s web page specifically set up for this organization.

    Bank Overview

    Discover Bank has an overall health grade of "A" at DepositAccounts.com, with a Texas Ratio of 7.84% (excellent) based on March 31, 2018 data. In the past year, Discover Bank has increased its total non-brokered deposits by $3.32 billion, an excellent annual growth rate of 9.32%. 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. With assets in excess of $100 billion, Discover Bank is currently the 27th largest bank in the country.

    How The Online Savings Account Compares

    When compared to the 215 Savings Accounts tracked by DepositAccounts.com that are nationally available with low minimum balance requirements, six Savings Accounts have higher APYs than Discover Bank’s Online Savings Account. Eight other institutions are also offering 1.75% APY.

    The above rates are accurate as of 7/6/2018.

    To review the top savings account and money market rates, both nationwide and in your local area, please refer to our Savings Account Rates Table and Money Market Rates Table.

    Related Pages: Salisbury savings accounts, savings accounts, money market accounts, 1-year CD rates, 5-year CD rates, nationwide deals, Internet banks

    Comments
    CC in CA
    CC in CA   |     |   Comment #1
    Thank you for posting this. I love this bank. This is great news!
    RJM
    RJM   |     |   Comment #2
    I knew this was going to happen. Discover always follows AMEX & ALLY and raises their rate shortly after the other two.

    I even transferred a little over from Ally Thursday for Friday delivery before I knew the rate would increase for sure.

    But, 1.75% is an inferior rate so I keep very little money with them. The discover money is just there to pay my Discover bill in a couple weeks. (from the 5% back grocery store deal last quarter)
    Discover Bank Ups Online Savings And Money Market Rates
    Deal Summary: Online Savings, 1.60% APY, all balances. Money Market, 1.50% APY ($100k+), 1.45% APY (below $100k).

    Availability: Nationwide (internet bank)

    In the last two weeks of May, Discover Bank has increased rates twice, which has added a total of 10 bps to both its Online Savings account and Money Market account.

    Online Savings Account

    The Online Savings account now earns 1.60% APY on all balances. More than a year ago, Discover Bank removed the $500 minimum opening deposit requirement for the Online Savings account, which can now...

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    More Discover Bank Rate Hikes - Savings Account, Money Market and CDs
    Deal Summary: Rate increases: Online Savings Account, 1.50% APY, No minimum balance: Money Market, 1.40% APY $100k+, 1.35% APY under $100k

    Availability: Nationwide (internet bank)

    Discover Bank increased the rates today of its Online Savings Account and Money Market Account by 10 bps. The Online Savings Account now earns 1.50% APY on all balances. The Money Market Account now earns 1.40% APY on balances of $100k and over. Balances under $100k now earn 1.35% APY. Discover Bank also increased the rates of eight of it CDs.

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    Discover Changes and Expands Availability of Cashback Checking

    Discover Bank announced yesterday a new rewards system for its Cashback Checking Account. Customers now earn 1% cash back on up to $3,000 in qualifying debit card purchases each month. Also, the account is now available to everyone. Previously, it was limited to Discover cardmembers, personal loan customers and deposit account customers.

    The Cashback Checking Account has several nice features, but it lacks one important feature: it earns no interest. For those who have interest checking accounts and use cash-back credit cards, there is a way that the Cashback Checking could...

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    Discover Bank Increases Rates - Savings Account, Money Market and CDs
    Deal Summary: Rate increases: Online Savings Account, 1.40% APY, No minimum balance: Money Market, 1.30% APY $100k+, 1.25% under $100k

    Availability: Internet Bank

    Discover Bank is the third internet bank to increase rates today, but unlike the other two, the new rates aren’t high enough to give Discover a rate leader status. Nevertheless, the new rates do keep Discover competitive with the other large internet banks, and hopefully, they will encourage other internet banks to follow.

    Most noteworthy is Discover’s rate increase of its Online Saving Account....

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    Discover Bank Increases Savings Account and Money Market Rates

    Deal Summary: Rate increases: Online Savings Account, 1.30% APY, No minimum balance: Money Market, 1.20% APY $100k+, 1.15% under $100k

    Availability: Internet Bank

    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...

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