The chances are credit and Diners Club cards—not checking and saving accounts—come to mind when you think of Discover. Discover is the third largest credit card brand in the United States, but it is also a direct bank that offers a wide variety of products and services that go way beyond credit cards. A direct bank is a bank that operates entirely through online and telephone banking.
Discover Card was first launched in 1985 by Sears. In 1997 in merged with Morgan Stanley and was spun off as a separate company in 2007. It is one of the fastest growing banks in the United States with a total loan growth of 6% between 2009 and 2013, and a 19% average return on equity during the same period. As of 2015, it is valued at $25.8 billion and made $9.51 billion in sales. Discover has its headquarters in Riverwoods, a suburb of Chicago, Illinois. It has an A+ rating with the BBB and a four-star rating with Bauer Financial.
Discover is one of the larger online banks. This gives you the peace of mind of an established financial institutions with the 24/7 customer service, better rates, and reduced fees of online banking. Discover also owns Pulse’s ATM network, which gives it a total of 60,000 surcharge-free ATMs.
Discover’s checking account charges no monthly fees and has not monthly balance requirements. It doesn’t pay a regular interest rate, but customers do receive 10 cents cash back for every debit card purchase up to a maximum of $120 a year. You only require $25 to open an account. Paying bills online and reordering checks is free. Even ordering an expedited replacement debit card is free. It doesn’t stop there. Official bank checks, ACH outbound transfers, and incoming wire transfers are also free.
Outgoing wires do have a $30 fee. Returned deposits have a $15 fee, and there’s also a $30 insufficient funds free. However, these are lower than the fees charged by traditional branch banks.
Discover’s savings account has no monthly balance requirements, no monthly fees and offers 0.95% APY regardless of your balance. Compare that to the 0.01% APY most banks offer. The minimum opening deposit is $500.
What Are The Advantages And Disadvantages of Discover's Checking And Savings Accounts?
Discover provides a nice balance between full-service banking, with access to CDs, retirement account and money markets with low fees and high-interest rates. Although Discover doesn’t have the highest interest rates among online banks, its rates are similar to most banks Here are the pros and cons of Discover’s checking and savings accounts.
- High-interest rates (0.95% APY)
- Wide selection of financial products under one roof (CDs, IRAs, Money Market)
- Large surcharge-free ATM network
- No monthly fees
- No monthly balance requirements
- Cashback on purchases up to $120 a year
- Low fees
- Transparent fee schedule: no hidden fees
- Excellent online and mobile banking platforms
We don’t like:
- $500 minimum initial deposit for savings accounts
- Not the highest interest rate available for online banks
- No regular interest rate on checking accounts. Effective maximum return of $120 a year.