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Why I Replaced My Online Accounts with Discover Bank

Awhile back, I took advantage of a Free Money Friday [1] offer to open a new E-Trade [2] account. Some time later, that account was converted [3] along with most E-Trade deposit accounts to a Discover Bank [4] account.

If you’re like me, you associate Discover [5] with credit cards [6] only – in fact, I previously had no idea that they had a bank arm at all! Now that I’ve had my account for several months, I thought I’d share my thoughts with all of you.

Discover Bank Account Details

  • Interest Rate: 1.15% APY.
  • Opening Balance: You must open your account with at least $500. Accounts transferred from E-Trade were exempt from this requirement.
  • Minimum Balance: Once the account is opened, there is no minimum balance requirement.
  • Fees: None for incoming wire or a limited number of electronic transfers/withdrawals (see below). Outgoing wire transfers cost $20-$40.
  • Withdrawals: Up to 6 free withdrawals per month, then $15 per additional withdrawal.

Discover Bank Account Features

  • Transfers: As with other online banks, you can only “push” transfers rather than “pull” them, meaning the transfers have to be initiated to/from Discover Bank [4] rather than in any other account. As with most electronic transfers, funds will take 3-4 days to appear in your linked account.
  • Resources: Discover Bank [4] provides resources beyond those of your average online bank. Their “Tips and Advice” [7] page gives you more information about how their products and good financial habits can work for you. Their online savings calculator [8] allows you to plan for the future, and their FAQs [9] are very comprehensive.
  • Customer Service: I had to use customer service after I accidentally initiated a transfer to a closed bank account [10] and the funds bounced back to Discover [4]. For my protection, Discover [4] prevented me from making future transfers until I could verify my identity and delete the closed account from my linked accounts. My initial email was answered within 4 hours, and when I called the 1-800 number as directed I did not have to wait at all before speaking to a very knowledgeable representative and getting my transfer privileges immediately reinstated.

Other Discover Bank Products

In addition to the online savings account, Discover Bank [4] offers a Money Market [11] account, CDs, and even IRA CDs. The money market account pays up to 1.10% (1% for deposits less than $10,000) and allows you to write checks and make ATM withdrawals. The CDs pay 2.35% for a 5-year term and the IRA CDs pay 3.0% for a 10-year term. For more on the various products, see this information page [12] from Discover Bank.

My Experience with Discover Bank

I’ve been very happy with Discover Bank [4]. Their interface is easy to use and their interest rate surpasses [13] many of the well-known online savings accounts. In fact, in a quest to simplify my financial life I recently closed my accounts with EmigrantDirect [14] and INGDirect [15]. While I was happy [16] with most other aspects of those accounts, the interest rate at Discover was enough to make my Discover account one of two online savings accounts I use regularly (the other [17] is SmartyPig [18]).