Discover Bank

Discover Bank Review – Online Banking for Savings, Money Markets & CDs


Rating: 4.5

Discover Bank Open an Account

You’ve probably heard of Discover Financial Services, a publicly traded company (NYSE: DFS) that offers consumer-friendly credit cards like the Discover it Card. According to the Nilson Report, it’s among the United States’ 10 biggest credit card issuers.

What you may not know as much about is the online-only bank that Discover administers, Discover Bank. It offers a checking account, savings accounts, money market accounts, CDs, and retirement products, all of which are FDIC insured. This segment of the company competes with online banking heavyweights such as Ally Bank and EverBank.

Key Features

CashBack Checking Account

Discover Bank’s CashBack Checking account is available to anyone with a Discover-branded credit card or existing Discover Bank account, such as a savings or money market account. It requires a minimum opening deposit of $25, but no minimum daily balance or monthly fee. It also comes with 50 free checks and offers fee-free ATM transactions at more than 60,000 ATMs in Discover’s U.S. network.

However, the real benefit of CashBack Checking is its rewards program. Whenever you make a debit card purchase, online bill payment, or paper check payment, you accrue a reward of $0.10 per transaction, regardless of the transaction’s size. However, you can only earn rewards on the first 100 transactions in a given statement period, which means that rewards are effectively capped at $10 per month. You can redeem your reward balance at any time and in any amount as a cash deposit into your CashBack Checking account or as a statement credit on your Discover credit card, if you have one. Rewards never expire.

Savings Accounts

Discover Bank offers a savings account with a current APR of 0.95%. The minimum opening deposit of $500 can be made via online transfer from an existing bank account. However, you don’t need to maintain a minimum balance after that initial deposit. Outbound transfers are capped at six per month, with Discover assessing a fee of $15 for each additional one – there’s no limit on inbound transfers. If you attempt an outbound transfer but don’t have enough money in your account, you’re charged $30 per attempt.

Money Market Accounts

Discover Bank’s money market account currently has an APR of 0.80% for balances less than $100,000, a minimum opening deposit of $2,500, and a minimum daily balance of $2,500. If your account drops below $2,500 at any point during a statement cycle, you are charged $10 at that cycle’s end. Money market accounts come with free checks and a free debit card, but are subject to the same six-withdrawal-per-period limit as savings accounts. Excess withdrawals also cost $15 per item, and non-sufficient funds (NSF) transactions cost $30 per item. Any balance over $100,000 earns an APR of 0.85%.


Discover Bank offers 12 separate CDs, with terms of 3, 6, 9, 12, 18, 24, 30, 36, 48, 60, 84, and 120 months. All require a minimum deposit amount of $2,500. 30 days before your CD expires, you’re asked to redeem it or renew at the same rate and term. You have until nine days after its expiration to redeem, after which the CD is automatically renewed. Rates range from 0.35% on the 3-month vehicle to 2.20% on the 120-month product, with the popular 12-month account yielding 1.15%. Early withdrawal penalties are as follows:

  • Three months’ interest for terms of less than 12 months
  • Six months’ interest between 12 and 36 months
  • Nine months’ interest for 48 months
  • Eighteen months’ interest for 60 months
  • Twenty-four months’ interest for 84 months and up


Discover Bank lets you open a IRA account (Roth or traditional) with any of its CD products. There are no monthly maintenance fees. While these accounts are advertised as tax-free, you may have to pay tax and penalties on withdrawals made before age 59 1/2. You can roll over several types of retirement accounts, including 401ks, 457 deferred compensation plans, annuities, and other traditional or Roth IRAs.

Mortgage and Home Equity Loans

Through Discover Financial Services, Discover Bank offers access to mortgage, mortgage refinancing, and home equity loans. Its mortgage loans include a 30-year fixed rate, 15-year fixed rate, 15-year fixed rate FHA, and 5/1 adjustable rate vehicles. Refinance loans come in 30-year fixed, 15-year fixed, and 5/1 adjustable versions.

Other Loans

Like Sallie Mae’s Smart Option Student Loan portfolio, Discover Bank also offers student loans for undergraduates, graduates, and post-graduates (such as medical residents and law school grads studying for the bar). The bank doesn’t charge origination or maintenance fees on these loan products, which come with rewards (a one-time cash rebate equal to 1% of the value of a newly issued student loan) for maintaining a GPA above 3.0 or its equivalent. To redeem this reward, you need to submit your transcript for the academic term covered by the loan within six months of its end date. Discover then reduces your loan’s principal by 1%. An interest rate credit of 0.25% also applies to accounts with auto-debit. Additionally, Discover Bank issues personal loans for non-students, including debt consolidation loans and loans for big-ticket purchases. Discover Bank doesn’t disclose interest rates for these loans on its website – you need to call for a personalized rate quote.

Other Features

  • No-Fee ATM Network. Discover works with the MoneyPass and Allpoint networks to provide fee-free ATM access at about 60,000 ATMs in the U.S. The bank’s online, mobile-friendly ATM locator marks these fee-free ATMs with orange pins.
  • Google Wallet. Discover’s partnership with Google Wallet lets you store your Discover credit or debit card on your phone and pay for purchases without taking the card out of your wallet. Participating retailers include McDonald’s, Macy’s, CVS, Walgreens, Home Depot, Subway, and Petco.
  • Mobile Check Deposit. Discover Bank has a pretty extensive mobile banking app that lets you deposit physical checks without visiting a branch or using the postal mail. Just enter the amount of your check, take photos of the front and back, and confirm your deposit.
  • Gift Cards. Using the funds from your Discover savings or money market accounts (or any third-party bank account), you can purchase personalized, Discover-branded gift cards for $3.95 each. Denominations range from $20 to $500.

discover bank online savings


1. Direct Access to Consumer and Business Credit Cards

Unlike many other online banks, including Ally Bank and GE Capital Bank, Discover Bank offers direct access to four credit cards for individuals and businesses. All come with useful perks.

  • Discover it Card. Like the Chase Freedom card, Discover it offers 5% cash back on your first $1,500 spent in purchase categories, such as home improvement stores and movie theaters, which rotate quarterly. You get 1% cash back on all other purchases, without limit. These rewards can be redeemed for cash in the form of a check or bank account deposit, or for a gift card purchase.
  • Discover it Card for Students. This one pays 2% cash back on up to $1,000 per quarter in purchases from gas stations and restaurants, and an unlimited 1% cash back on all other purchases.
  • Discover Business Card. Each year, this card offers 5% cash back on your first $2,000 in office supply purchases and 2% cash back on your first $2,000 in gas purchases.
  • Discover Business Miles. This card offers travel rewards points that can be redeemed without restriction for flights booked online, through travel agents, or directly through an airline. You get double points for your first $5,000 in gas and travel purchases, and unlimited double points for purchases through Discover Deals. Every other purchase earns 1 point per dollar spent.

As a Discover credit card holder, you can also use the Discover Deals feature to earn between 5% and 20% cash back on purchases made through its online portal. This functions like theChase Ultimate Rewards and Upromise shopping portals: You choose from a list of about 200 online retailers on Discover’s website, click through to their respective sites, and make purchases with your Discover credit card. Cash back rewards then accrue to your account.

2. Convenient Payment With Google Wallet

Discover Bank partners with Google Wallet, allowing you to make debit or credit payments at major retailers without actually swiping your card. Other major credit card issuers, such as Visa and MasterCard, also offer this service, as do brick-and-mortar banks like Citibank. However, online banks such as Ally Bank, EverBank, and Capital One 360, do not.

3. Full Line of Loan Products

Although many national brick-and-mortar banks offer lending services for homebuyers, refinancing homeowners, and folks who just need some extra cash, online banks often have limited or nonexistent lending services. For instance, Ally Bank only makes auto loans to its clients. EverBank only deals with folks who want to buy or refinance their homes. And GE Capital Bank offers no loans at all.

By contrast, Discover Bank makes mortgage loans, refinancing loans, home equity loans, a full lineup of student loans, and personal loans for debt consolidation and big-ticket purchases.

4. 24-Hour Customer Service

Discover Bank features an online secure message feature and a traditional phone center. The former is open at all times except midnight to 7am eastern time on Sundays, but the customer service center is always open to take phone calls. While some online banks (such as Ally Bank) also offer 24-hour phone support, many – including GE Capital Bank and EverBank – do not.

5. No Fees for Checks

Even if they offer to cover the cost of your first book of personal checks, many online banks charge for the privilege of cutting a cashiers’ check or sending additional books of personal checks. For instance, EverBank charges $10 per bank check and Capital One 360 charges $5 for every additional book of 50 checks that you order. Many brick-and-mortar banks charge similar fees: Bank checks cost $10 a piece at Wells Fargo, and Flagstar Bank charges $20 plus tax for 100 new checks.

By contrast, bank checks cut from Discover Bank’s money market accounts, savings accounts, and even CDs never cost anything. Discover also never charges for issuing checks to your account.


1. High Minimum Deposits for Money Market, CD, and Savings Accounts

Discover Bank imposes minimum deposit requirements for its savings accounts ($500), money market accounts ($2,500), and CDs ($2,500). Ally Bank and Capital One 360 both lack minimums on their money market and savings accounts. EverBank requires $1,500 for its money market and savings accounts. For traditional banks, opening deposit requirements are usually minimal, with Chase Bank’s savings account requiring just $25 to open, and Wells Fargo’s money market account asking $50 to open.

2. No Early Withdrawals for CDs

In addition to the high minimum opening deposit, Discover Bank’s CDs have another big limitation: You can’t cash them out early without incurring a penalty. This isn’t unusual, but no-penalty CDs have become more common in recent years. For instance, Ally Bank’s No Penalty CD offers an 11-month term with a 0.87% interest rate. PNC Bank’s Ready Access CD has a 12-month term and a 0.85% yield. Discover Bank’s closest analogue, the 12-month CD, comes with an interest rate of 1.15% and an early withdrawal penalty of three months’ interest.

3. No Brokerage

Discover Bank might offer more loans than many of its online bank competitors, but it’s not attached to a brokerage that could provide additional investment options for account holders. Other online banks are much better in this department.

Capital One 360 lets you link a checking, savings, or money market account to its Sharebuilder platform and trade stocks, mutual funds, ETFs, and options with your deposited funds. EverBank has an even broader range of investing options, including bonds, precious metals, and currencies (in addition to stocks, ETFs, and mutual funds). While Discover Bank does offer retirement accounts, they’re limited to CDs.

4. Past Legal Issues

Though Discover Bank generally enjoys high customer satisfaction ratings, it has seen its share of controversy in the past. In 2005, the Supreme Court of California issued a ruling against the bank which invalidated a class action waiver contained within its arbitration clause. Basically, the waiver prevented regular customers with relatively small monetary claims from joining class action suits against the bank. As a result of the verdict, Discover was forced to remove the class action waiver from its customer contract. If you’re looking for a bank with an unblemished record of customer service, look elsewhere.

5. No Business Accounts or Loans

Although Discover Bank does offer credit cards for small business owners, it doesn’t have any business banking accounts. Contrast this with EverBank, which has separate checking options for small businesses, large businesses, and nonprofit organizations, as well as money market accounts and CDs for businesses of all types. Unlike its Jacksonville-based competitor, Discover Bank also can’t get you a business loan. While some other online banks focus solely on consumers, many traditional banks offer commercial loans as well.

Final Word

Discover Bank offers an almost-full suite of online banking services, including checking accounts, savings accounts, money market accounts, retirement options, and CDs. It also connects its customers with several popular credit cards, which offer perks like cash-back rewards and online shopping discounts. Discover Bank issues several types of loans for students, home buyers, existing homeowners, and regular consumers who need extra cash. That said, better options for business customers would help attract even more users into the fold.


Despite previous legal troubles related to its treatment of customers, Discover Bank has a robust customer service infrastructure that’s always available in some form. If you’re looking for an online bank that lets you open a range of accounts and gives you access to many different credit vehicles, take a closer look at Discover Bank.


4.2 out of 5 stars: High minimum deposits and a lack of business accounts count against Discover Bank. Great credit card, savings, and retirement options work in its favor. Overall, a solid bank for consumers.

Have you had any experience with Discover Bank? Would you recommend it to others?

Comments Disclosure: The below responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

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