Discover Bank Review: Fee-Free Features Worth Checking Out

Discover Bank might be the best online option for you.

People have known about the Discover card since its national launch in 1986 when its Super Bowl commercial announced it was the “Dawn of Discover.” Discover, however, is much more than a card today. The financial institution offers multiple banking products with a mission focused on helping its customers engage in smarter spending, saving and debt management to make the most of their financial futures.

Discover Bank has a variety of banking products to financially assist with many key moments in your life. Find out what you may be missing.

Here’s a look at what you’ll find in this Discover Bank review:

Who Discover Bank Is Best For

Discover Bank offers unique banking products that make this financial institution one of the top banks out there, however that doesn’t necessarily mean it’s the best option for you.

Take note of your banking behaviors and needs, and see how they align with this chart.

Pros and Cons of Discover Bank
ProsCons
$0 monthly maintenance feesAlmost an entirely online bank — so likely no physical branches near you
High savings account annual percentage yieldIn-network ATM locations may not be convenient
U.S.-based customer serviceNot a one-stop banking experience like traditional brick-and-mortar branches

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Who May Want To Skip Discover Bank

Discover makes a strong argument for the benefits of opening an account with a digital bank. Online banking isn’t for everyone, however. Consider skipping Discover Bank if you:

  • Enjoy a personal relationship with your bank. Money and finances are personal, so having a consistent, in-person customer service relationship with a bank employee may be important for you.
  • Need quick access to your money. Although Discover offers a wide ATM network, sometimes in-network ATMs aren’t as accessible.
  • Want a one-stop shop. You may want to handle multiple banking actions under one roof instead of juggling online transactions and spending time on the phone with customer service representatives.

If you are still undecided if Discover Bank is the right choice for you, consider who the financial institution is best and worst for.

Who Is Discover Bank Best and Worst For?
Best for those who: Worst for those who:
Prefer online bankingMake consistent cash deposits
Don’t need to make cash deposits very oftenLike visiting physical branches
Have direct deposit payments linked to their bank accountsWant to build a personal relationship with bank tellers and managers

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Types of Accounts Available

Discover Bank has grown in banking products since its beginnings in the 1980s, with a wide range of banking accounts available to its customers. Each product has unique features and competitive rates worth exploring.

This table breaks down the key takeaways and features each account offers.

Features, Rates and Fees for Each Discover Account
Account TypeRatesFeesFeatures
Online Savings Account1.70% APY$0Free official bank checks, insufficient funds charges and account closures
Cashback Debit Checking Account1% cash back on $3,000 of monthly debit card purchases$0Free standard checks, replacement debit card, online bill pay, official bank checks, stop payment orders, insufficient funds and account closures
Money Market Account1.65% APY for balances under $100,000; 1.70% APY for balances over $100,000$0Free online bill pay, standard checks, replacement debit card and official bank checks
Certificate of Deposit2.00%% APY on 12-month term; 2.05%% APY on 24-month term; 2.10%% APY on five-year term$0; penalty applies if you withdrawal before the maturity dateCompetitive rates among other financial institutions
Individual Retirement Accounts2.10% APY for 12-month term, 2.15% APY for 24- month term, 2.20% APY for five-year termEarly withdrawal penalty may apply. No transfer fees when rolling over funds from outside IRAs.Competitive rates among other financial institutions
Personal LoansDiscover’s personal loans give up to $35,000 with rates ranging from 6.99% APR to 24.99% APR.No application feeLack of fees and a dedicated loan specialist
Home Equity LoansDiscover’s home equity loan gives between $35,000 to $200,000 with a repayment plan of 10, 12, 15, 20 or 30 years with rates ranging from 3.99% APR to 11.99% APR.No application fee, no closing fees for your personal or home equity loansLack of fees and a dedicated loan specialist
Student LoansDiscover’s student loans have a variable rate of 3.12% APR  to 11.62% APR and a fixed rate of 4.74% APR to 12.99% APR.No application feeLack of fees and a dedicated loan specialist

See: How To Get a Discover Home Equity Loan

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Online Savings Account

Discover Online Savings Account has an interest rate of 1.70% APY, which is more than five times the national savings average. In addition to the high APY, there is also a $0 monthly maintenance fee — unlike competing banks with fees as high as $8 per month.

Features

Multiple features are available with this account, but the main draw is the lack of fees that apply:

  • Daily/monthly compounded interest
  • Free official bank checks
  • No charges for insufficient funds
  • $0 account closures
  • $0 for stop payment orders

Pros and Cons

It’s easy to argue that the pros outweigh the cons with a high APY interest rate and no monthly fees, but that doesn’t mean Discover’s online savings account is a perfect banking product.

Pros:

  • $0 minimum opening deposit; deposited items are returned
  • Free and easy online banking
  • Mobile app banking with mobile check deposit

Cons:

  • Only one physical branch to visit
  • Customer service only available over the phone

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Cashback Debit Checking Account

Discover’s Cashback Debit checking account offers 1% cash back on qualifying purchases. Qualifying purchases equal most debit card purchases, excluding peer-to-peer transactions like Venmo or Apple Pay.

Features

  • Cash-back debit card
  • Free standard and official checks
  • Free online bill pay
  • Free stop payment order
  • Free account closure
  • Free replacement debit card with expedited shipment
  • Account can link to Zelle

Pros and Cons

It’s easy to argue that Discover’s Cashback Debit checking account has plenty of benefits, especially with 1% cash back on qualifying monthly purchases for up to $3,000, but that doesn’t mean it’s the ideal banking product for you. Here’s some further food for thought.

Pros:

  • $0 minimum to open deposit
  • One of the few checking accounts with a cash-back option
  • Deposited items are returned
  • Free and easy online banking
  • Mobile app banking with mobile check deposit

Cons:

  • Only one physical branch to visit
  • Customer service limited to phone assistance

Good To Know: Here Are All the Documents You Need To Open a Checking Account

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Money Market Account

Discover’s Money Market Account features an APY of 1.65% for balances under $100,000 and 1.70% for balances of $100,000 and above. A money market account offers a great way to receive high interest rates while still having easy access to your money with ATM, debit card and check options.

Features

  • Free standard and official checks
  • Free online bill pay
  • Free replacement debit card, with expedited shipping
  • Free stop payment order
  • Standard limit of six free withdrawals
  • Mobile check deposit

Pros and Cons

As with any other banking product, it can be helpful to compare the pros and cons of Discover’s Money Market Account before you click the “Get Started” button.

Pros:

  • Free and easy online banking
  • Mobile app banking, as well as mobile check deposit
  • Access to over 60,000 no-fee ATMs

Cons:

  • Only one physical branch to visit
  • Customer service assistance only available via phone

Read Next: Differences Between Money Market Accounts and Savings Accounts

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Certificate of Deposit

Discover’s CDs have flexible rates and terms that range from three months — 0.35% APY — to 10 years — 0.00% APY. The bank’s CD APYs are very competitive, beating out both Bank of America’s and U.S. Bank’s APY rates.

Features

  • Free official bank checks
  • Quick online access to your CD account
  • No fees, except for withdrawing money before the maturity date

Pros and Cons

With such a competitive APY rate, the pros of a Discover CD likely outweigh the cons — as long as you’re looking for a less-than-traditional banking experience.

Pros:

  • Bank provides simple, three-step guide to opening a CD account
  • No account fees 
  • Guaranteed rates

Cons:

  • Only one physical branch to visit when setting up CD
  • Only over-the-phone customer service available when deciding on your financial future

Compare: This Is How Much You Need To Open CDs at Chase and 18 Other Banks

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Individual Retirement Accounts

Discover’s IRA account offers both a Roth IRA CD and a Traditional IRA CD.

A Roth IRA requires you to pay taxes on your IRA CD funds, but you won’t be taxed later on when you withdraw your funds. A Roth IRA is a good choice for someone who would rather be taxed now than when they get ready to cash out because taxes are due upfront. Contributions to a Roth IRA CD are not tax-deductible, but you can withdraw funds at any time. Note that these specifics are not unique to Discover Bank.

A traditional IRA does not require you to pay taxes on your IRA CD funds, but you will be taxed later on when you withdraw your funds. A traditional IRA  is a good choice for someone who believes the tax rate will be lower than what it is currently. Contributions to a traditional IRA CD are tax-deductible up to a certain limit. You can only begin to withdraw funds from your traditional IRA without an IRS penalty after age 59 1/2, and you do not have penalty-free access to your funds until you are 70 1/2 years old. These specifics are not unique to Discover Bank.

Features

  • Transfer money from other IRA accounts into your Discover IRA CD as many times as you want, or combine smaller IRAs to make a larger IRA fund. This transfer is not considered a contribution to your IRA, but a check written from your previous IRA financial institution to Discover Bank, which means you are not a variable in this transfer.
  • Roll over funds from another IRA to your Discover IRA CD only once in a 12-month period. The distribution of IRA-to-IRA funds has to be made within 60 days of you receiving the funds, or else you will be taxed. You are the one in control of receiving the IRA funds and distributing them into your new Discover IRA CD.

Pros and Cons

The pros and cons of having an IRA CD with Discover Bank truly depend on how and when you plan on accessing your funds, as well as how and when you want to make contributions.

Pros:

  • Discover’s IRA CDs have high APY rates ranging from 2.10% APY for a 12-month term to 2.20% for a five-year term. Discover’s rates are better than both U.S. Bank’s 0.10% APY for a 12-month term and Bank of America’s 0.05% APY for a 12-month term.

Cons: 

  • Contribution limits apply to IRA CDs that are not specific to Discover Bank but are worth noting. IRA CDs only allow a certain amount you can invest depending on your age, yearly income and marriage status. To find out your contribution limit, use the Discover’s online calculator.

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Investment (Nonbank) Options

At this time, Discover Bank does not offer any investment (nonbank) options.

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Loans

Discover offers personal, home equity and student loans. Discover’s personal loans offer amounts up to $35,000, with rates ranging from 6.99% APR to 24.99% APR. Discover’s home equity loans are available for amounts between $35,000 to $200,000, with a repayment plan of 10, 12, 15, 20 or 30 years, with rates that range from 3.99% APR to 11.99% APR. Discover’s student loans have a variable rate of 3.12% APR  to 11.62% APR and a fixed rate of 4.74% APR to 12.99% APR.

Features

Here’s a look at some of the main features of each type of loan Discover Bank offers.

Personal Loans:

  • Flexible repayment plans ranging from 36-84 months
  • Return loan funds within 30 days and pay $0 in interest
  • No origination fees or closing costs

Home Equity Loans:

  • No application fees
  • No appraisal costs
  • No mortgage taxes
  • U.S.-based, dedicated personal banker assigned to you for questions

Student Loans:

  • No origination fee, application fee or late fee
  • 100% of school-qualified college costs are covered by Discover’s student loan
  • With a minimum 3.0 GPA, a one-time cash reward for each new student loan granted
  • Discover offers U.S.-based student loan specialists 24/7 year-round
  • Choose between in-school or deferred student loan repayment options
  • Application process can take as little as 15 minutes

Pros and Cons

Discover’s loans certainly have competitive features that are beneficial, but disadvantages also exist. Here’s what you need to know.

Pros: 

  • No origination fee for student loan and personal loan products
  • No application fee for all three loan products
  • Dedicated loan specialists for student loans and home equity loans
  • No closing fees for personal or home equity loans

Cons: 

  • Discover does not offer a unique auto loan product
  • Other online banks, such as Ally Bank, may offer lower APR on home loans
  • Only one physical branch to visit

Related: How To Pay Down Debt With a Discover Personal Loan

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How To Bank With Discover

When it comes to cash deposits or withdrawals, you can always use one of the 60,000+ no-fee ATMs available. Check deposits can be made either through snail mail, as transfers from third-party accounts or via the mobile app’s check deposit feature.

To open an account, you can follow a three-step process online or call Discover’s 24/7 customer service line at 800-347-7000.

Learn: How To Open a Bank Account Online

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Technology

Besides Discover’s headquarters, banking with Discover Bank is 100% digital. Discover offers a mobile app as well as a banking website. The lack of multiple physical branches allows for high APY rates because there are fewer overhead costs for Discover Bank to cover.

See: Cashier’s Check vs. Money Orders — Here’s the Difference

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Fees

Discover does not have fees for its checking account, online savings account, money market account, CDs, IRA CDs or loans — period. Although you may be able to find similar features among other online banks, having no fees on its account products makes Discover stand out from most brick-and-mortar financial institutions.

You will not find fees for Discover’s online banking features or account closures. Plus, there are no monthly maintenance fees on applicable accounts across the board.

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Availability of Funds

Funds availability depends on the type of deposit at Discover Bank. For all checks drawn on Discover Bank, funds up to $15,000 will be available within the first business day, and the rest will be available on the second business day for new and existing customers.

U.S. Treasury Check funds up to $15,000 are available to existing Discover customers on the first business day, with the remainder becoming available by the fifth business day. For new Discover customers, up to $5,500 is available on the first business day, with the remainder becoming available by the fifth business day.

Money orders or special checks, such as U.S. Postal money orders, cashier’s checks, official checks, certified teller checks, state or local government checks and traveler’s checks, presented in-person to an employee are available to new and existing Discover customers for up to  $5,500 within the first business day, and the remainder will be available on the fifth business day.

Money orders or special checks not presented in-person to an employee are available to new and existing Discover customers on the day of the deposit for up to $250 of the deposit. The next $5,300 is available within the second business day, and the remainder is available on the fifth business day.

All other checks are available to existing Discover customers on the day of the deposit for up to $250 of the deposit. The next $5,300 is available within the second business day, and the remainder is available on the fifth business day. New Discover customers have access to their $250 of their deposit on the first business day, and the remainder is available on the fifth business day.

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Discover Bank: Worthy of Your Wallet

Discover Bank offers its customers a variety of advantages that may entice you to open an account but consider the drawbacks in addition to the benefits if you’re still not sure whether this is the best bank for you.

Benefits

  • High APY on all banking products
  • 24/7 U.S. based customer service
  • No fees

Drawbacks

  • Only one physical branch
  • Manual deposits require either transferring funds from an external bank, mailing in a check made out to you or using mobile check deposit

Ultimately, Discover Bank has excellent APY rates and many fee-free features, which equal some of the more competitive banking benefits available. Overall, if you’re down with digital banking, Discover might make a great home for your money.

Keep reading to find out about more of the best banks out there.

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More From GOBankingRates

Rates and fees are accurate as of Nov. 11, 2019, and are subject to change. All other information on accounts is accurate as of Nov. 11, 2019. This content is not provided by Discover Bank. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone and have not been reviewed, approved, or otherwise endorsed by Discover Bank.

About the Author

Jared Nigro is from Pittsburgh, which is obvious by the way he gravitates toward cheese at parties. He is a comedy writer from The Groundlings Sunday Company, Upright Citizens Brigade and has his own digital show on Comedy Central called “Broken People.” When he isn’t being funny, he’s reading books on debt and finance and listening to his favorite finance podcast, ChooseFI.