Discover Bank Increases Savings Account and Money Market Rates

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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 to Discover’s decision. Last June, Discover hiked its rates just a week before the June Fed rate hike.

APYMINMAXINSTITUTIONPRODUCTDETAILS
1.30%--Discover BankOnline Savings
1.20*%$100k-Discover BankMoney Market
OTHER TIERS: 1.15% Up to $100k
Accounts mentioned in this post. Rates as of December 17, 2017.

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.

Availability

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.

Bank Overview

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 RateAccount NameCredit Union/Bank
1.50% APYDollar Savings Account (no min)DollarSavingsDirect
1.45% APYSavings Account (no min/$5M max)Live Oak Bank
1.35% APYPremier High Yield Savings Account (no min/$250k max)CIT Bank
1.30% APYOnline Savings Account (no min)Discover Bank

The above rates are accurate as of 12/7/2017.

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, nationwide deals, Internet banks

Comments
TheBombingRange
TheBombingRange   |     |   Comment #1
Has anyone heard of the $25 minimum to ACH push money out of Discover accounts? I faced this issue while trying to make a small transfer out, and couldn't find anything about this anywhere in their documentation or website.
Anonymous
Anonymous   |     |   Comment #3
That minimum has been in effect for at least the last few years, though I don't know if it's documented anywhere.
deplorable 1
deplorable 1   |     |   Comment #6
Yes the $25 ACH minimum is not only for withdrawals but for deposits as well. I have a custodial account set up for 3 minors and it gets irritating that I cant make small deposits to their accounts. I got around this by having my account linked to theirs and I can then transfer any amount from my Discover savers/checking account to theirs. These limits only seem to apply to third party banks. All in all they are a great kids first savings account with no balance requirement or monthly fees required to earn a decent rate of return.
buckeye61
buckeye61   |     |   Comment #2
https://aaa.discoverbank.com/aaa/index.html?referrer=aaa&ets=EA1BF70159DC2&association=aaa&club=002

AAA link is available under the "Financial" tab on AAA website.....mine is AAA Arizona. They offer a 5 basis points increase on all CD terms.
Ken Tumin
Ken Tumin   |     |   Comment #4
Thanks for the link. That linked worked for me this morning, but now it gives me a page that says "We are unable to process your request at this time. You may have reached this page through a previously established bookmark or old web link or your AAA Club may no longer participate in the AAA/Discover Deposit Program."

One thing that's confusing is that AAA has different AAA Clubs for different regions of the country. They have different websites for each Club, and they automatically direct people to the website based on where your IP address is located. Since I'm in Florida, I get the Club that covers FL, GA and TN. For this FL-GA-TN Club, the website doesn't mention Discover Bank. Banking products are now from Auto Club Trust, FSB. It would be interesting to know which AAA Clubs still have a relationship with Discover.
RJM
RJM   |     |   Comment #5
Nice to see the increase. My problem with Discover is the slow ACH in/out.
Id have more money with them if not for that.

Yesterday afternoon, I was going to do an ach out of my broker for a small amount and was going to pull it via Discover only to find out I wouldn't get it until Monday. But at Ally, I get it Friday.

That makes ally more user friendly.

I used to use their cashback checking to earn $10 a month but I guess a lot of us were abusing it so they ended it.
stantheman
stantheman   |     |   Comment #7
Dollar Direct pays 1.5% on Savings account, no minimum and next day ACH.
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