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Discover Bank (Member FDIC) pays a much better savings rate than most traditional banks. With fewer overhead costs than their brick-and-mortar counterparts, the best online banks often pass savings on to customers through better rates and lower fees — and Discover Bank shines on both counts.
Discover Savings Rates
Discover Bank is an online bank and payment services company headquartered in Chicago. The Discover Online Savings Account pays 4.30% (as of 7/27/23) APY (Annual Percentage Yield), which is drastically higher than the average savings account interest rate. There is no monthly service fee and a $0 minimum deposit, and you'll earn the same rate regardless of your balance.
Discover Savings Rates Pros and Cons
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Discover Savings Rates FAQs
Yes, Discover has a high-yield savings account. A high-yield savings account is an account that online banks and credit unions offer that pays above-average interest rates on deposits. The Discover Online Savings Account pays 4.30% (as of 7/27/23) APY, well above the national average.
The Discover Online Savings Account currently pays 4.30% (as of 7/27/23) APY. The average savings rate is only 0.43%, according to the FDIC.
No, the Discover Online Savings Account doesn't have monthly account fees or minimum balance requirements. There are also zero fees for official bank checks, stop payment orders, insufficient funds, or bounced checks. Additionally, Discover doesn't charge an excess withdrawal fee (some banks charge a fee of about $10 if you make more than six monthly withdrawals from a savings account).
Yes, Discover Bank is a Member FDIC bank. Deposits held in a Discover Online Savings Account are insured for up to $250,000 per depositor, per account ownership type.
The Discover Online Savings Account has a lot of perks, but it may not be right for everyone. Discover doesn't have any physical branches, so you should be comfortable banking online. One disadvantage is that the account doesn't come with an ATM card. You can withdraw money by transferring it to your Discover Cashback Debit Account or an external bank account, though the latter option may take a few days. Or withdraw money with a domestic or international wire transfer, or by requesting an official bank check.
How Discover Savings Rates Compare
Discover Online Savings vs. American Express® High Yield Savings Account
The American Express savings rate of 4.25% APY as of 8/18/23 is slightly lower than Discover's rate. However, the difference is so minimal that it might mean earning only a few dollars less per year depending on your balance — so APY might not be the determining factor in your choice between the accounts.
Neither bank has monthly service fees, excess transaction fees, or minimum opening deposit requirements. Both banks offer 24/7 customer support, a highly rated mobile app, and various banking products, including checking accounts, CDs, credit cards, and personal loans.
One noteworthy distinction pertains to mobile check deposits. With Amex, you can deposit up to six checks totaling $50,000 during any seven-day period, with a limit of $25,000 per check — a flexible limit compared to many online banks. Discover's online disclosure doesn't specify limits; however, a customer service representative told us the limits are dynamic and new customers might start with a monthly limit of about $500.
You can't go wrong with either account in terms of interest rates and fees. Still, Amex may be the better option if you want more flexibility regarding mobile deposits. Otherwise, the decision may come down to your preferences and previous experiences with either bank.
Discover Online Savings vs. Capital One 360 Performance Savings
Capital One 360 is a suite of banking products from Capital One, one of the nation's largest banks by assets. While Capital One is primarily an online bank, it has physical branches in a handful of states and about 50 cafés (a cross between a bank branch and a coffee shop). Discover is an online-only bank, so it doesn't have any branch locations.
The Capital One 360 Performance Savings account offers a 4.30% (as of 7/21/23) APY on any balance. The interest in Discover's account compounds daily, while Capital One's interest compounds monthly. Depending on how much money you keep in savings, this may or may not make a significant difference.
The banks share similar features, including zero monthly and overdraft fees, a $0 minimum opening deposit, and no requirements to earn the APY. Both banks offer mobile check deposit with dynamic daily and monthly limits. Discover comes out ahead with 24/7 customer service; Capital One has live support seven days per week, but from 8 a.m. to 11 p.m. ET.
Discover and Capital One offer such similar rates, fees, and features that deciding between the two can be tricky. Ultimately, customers who live near a Capital One branch or café might choose it over Discover for the convenience of in-person banking. Discover might be a better fit if you prefer 24/7 customer support.
Why You Should Trust Us: How We Reviewed Discover Online Savings
We rate banks on a scale from zero to five stars, with five being the most favorable. For our Discover Online Savings Account review, we used Insider's savings account methodology, which considers minimum opening deposits, monthly service fees, interest rates, customer support, mobile app ratings, and the company's ethics.
When considering whether or not Discover is right for you, consider its additional product lines:
- Best Discover Credit Cards
- Discover Student Loan Review
- Discover Personal Loan Review
- Discover Home Loans Review
Editorial Note: 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 any card issuer. Read our editorial standards.
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