Discover Bank review: savings accounts from an innovative company
By Georgie Miller
For thousands of years, most people believed that the world was flat. Similarly, many people today believe that Discover is "just" a credit card company.
Pardon me while I snort with laughter.
It's true that Discover Card is one of the best-known cards in the biz -- "It really pays to Discover," after all -- but there's much more to Discover than credit cards, even if they did introduce the very first cash-rewards credit card way back in 1986. Today, Discover Bank -- the card company's division for deposit accounts -- offers a variety of savings options for consumers.
Discover Bank accounts
Discover Bank's accounts aim to help you balance flexibility -- that is, the ease with which you can access your money -- and yield, the amount you're getting out of your investment. The company offers three main options: a money market account, online savings account and high-yield CDs.
Discover Bank's money market accounts are available with a starting balance of only $2,500. Additionally, you can get free ATM withdrawals at Allpoint and MoneyPass ATMs. Since some online savings accounts don't offer ATM cards, this accessibility is a nice feature. You can also manage your account online or with Discover's mobile app. As of this writing, its yield has also consistently exceeded the national averages for money market accounts. You can see Discover's current rates in the table below.
Discover's online savings accounts are funded by linking to an existing bank account. Like most online banks, it offers fast and free online money transfers via its website or mobile app. At only $500, the minimum opening deposit for an online savings account is even lower than the requirement for the money market account.
Additionally, Discover's savings account doesn't have minimum balance or monthly maintenance fees. While you can't get an ATM card with this option, the online savings account's rates are, as of this writing, more than five times the national average for savings accounts. This makes its online savings option a perfect place to stash short-term savings.
They also offer certificates of deposit (CDs) for those looking for a little more commitment. While any CD requires locking up your money for a certain period of time, Discover offers flexible terms ranging from three months to 10 years, so finding a term that works for you shouldn't be difficult. Like the money market account, CDs can be opened with as little as $2,500.
Regardless which option works best for you, deposits with Discover Bank are FDIC-insured up to the maximum allowed by law (currently $250,000 per depositor, per insured bank), so you know your money is safe, in addition to working hard on your behalf.
Discover's mission and philosophy
Discover Card was introduced in 1985, making it the young, hipster addition to the credit card scene. It became an independent company, renamed Discover Financial Services, in 2007. But don't hold its youth against it. In addition to having a solid reputation, Discover has its finger on the pulse of consumer's banking needs. Literally. PULSE, one of the nation's leading ATM/debit networks, is also operated by Discover.
In addition to reliability and innovation, the company is committed to giving back, and not just via some of the best savings account rates around. It has relationships with a number of charitable organizations, and encourages its employees to support causes important to them. In fact, Discover Financial Services was recently recognized as "one of America's most community-minded companies" in the the Civic 50, a list of companies that the National Conference on Citizenship and Points of Light recognize for contributions to their communities.
But perhaps the cause nearest and dearest to the heart of this personal finance geek is Discover's quest to bring financial education into classrooms around the country. Check out its organization, Pathway to Financial Success, for the details, as well as tips for talking money with your own munchkins.
The bottom line
I always thought of Discover Card as the cash-back card of choice, but it turns out there are a lot more choices available through this company than I realized, including a strong line-up of online bank accounts. It pays to Discover, indeed.