Ben Todd | Apr 16, 2017 | 3
Discover Online Savings Account Review: Reach Your Savings Goals Sooner With A Discover Savings Account
We have all heard of the Discover credit card, but what about the Discover savings account? Is it worth taking the time to open a Discover savings account? What are their rates like? How are people reaching their savings goals with Discover? In truth, their rates are very competitive, they offer a fine service, and their focus on helping you reach your savings goals is laudable, useful, and effective if you actually have savings goals.
Why Aren’t Discover Cards Accepted Everywhere?
Even though the Discover credit card doesn’t have anything to do with the Discover savings account, we have answered this question here because over the years we have had quite a few people ask us why Discover is not accepted everywhere.
Compared to Visa and MasterCard, the Discover credit card is not accepted in as many places, but the number of merchants that accept Discover is growing.
Discover cards charge a higher fee to merchants for card processing, which is why many merchants didn’t and do not accept them, but that has changed these day.
One of the reasons Discover credit card acceptance is growing is because merchants have decided to start charging customers for their card processing fees. Both online and offline, you can expect charges of between 50 cents and $3 for using your Discover credit card.
Why Does Discover Have A Bad Reputation?
Another common question we receive is why Discover has a bad reputation. If you don’t think it does, then check out this article on the Top 510 Complaints and Reviews about Discover.
The article sums up why the Discover Company has such a bad reputation. It is a mixture of reasons, from unexpected charges on credit cards, to them cancelling your card because you do not use it often enough.
One reason why it has a bad reputation is its high merchant fee charge, which some merchants pass down to the consumer (which the consumers do not like). The Discover Company also has a reputation for letting anybody get a card, which people associate with letting poor people have a credit card that they are going to default on.
Also, when it comes to the Discover credit card, they have a habit of making advertising claims with small-print terms. People do not read the small print and feel cheated when they do not get their bonuses or rewards.
Do Discover Play The Same Tricks With Their Savings Accounts?
The company used to play such tricks in the past where they made bold marketing claims that they barely kept, but these days they do not have to drum up business for their savings accounts because their rates are competitive.
Can You Find Better Savings Rates Elsewhere?
Probably if you shop around, but that is hardly the fault of Discover. They do not need to rope you in with sleazy marketing because they are offering good (albeit not the best) savings rates. The biggest non-truth they tell (it is like a lie, but I cannot say that without being sued), is that their transfers are instant because they are often not. I often find that their transfers are as quick as my credit card transfers, which usually take one to two days on weekdays and longer over the weekend.
In the image, you can see Discover’s biggest savings account claim that you may earn five times more than the national savings average. In service to you, the image contains the small print that goes with the bold claim.
The Savings Account Is Not An Exclusive One
Just because they are not jumping up and down to try to get your attention and your business, they are also not exclusive. They offer a fair deal that average savers (people who save, but not in repetitively large amounts) can use and appreciate. For example, there are no monthly fees, and there is no minimum balance requirement. You can forget about your account for months and they will not charge you or penalize you. They do ask for a $500 opening deposit, but you get that money back since it is placed in your new savings account.
The Difference Is Pretty Dramatic With A Discover Savings Account
That is the claim they make on their website homepage. After the claim, the website shows the Discover savings rate, which is 0.95% APY (which is pretty good), and the rate of various other banks with a 0.01% APY.
The claim stinks of selection bias, so I went out looking for higher rates to get a clearer picture of just how good the Discover savings account rate really is. Here are the APY rates I found:
1.10% Mysavingsdirect Savings Account
1.10% Eonesavings Salem Five Direct
1.05% Synchrony Bank’s Savings Account
1.00% Igobanking.com High Interest Savings
1.00% Ally Bank’s Online Savings Account
1.00 % Cit Bank’s High Yield Savings Account
1.00 % Barclays’ Online Savings Account
1.00 % Ally Bank
0.95% Fnbo Direct Online Savings Account
0.95% Discover Savings Account
0.90% Bank5 Connect Savings Account
0.90% American Express
0.85% Colorado Federal Savings Bank
0.80% Sallie Mae Bank
0.75 % Capital One
0.40% First Internet Bank
0.30% Nationwide Bank
0.15% Usaa Federal Savings Bank
0.10% Schwab Bank Savings Account
0.06% Zions Bank
0.01% Wells Fargo
0.01% U.S. Bank
0.01% Chase Savings Plus Account
0.01% Bank of America
0.01% Citibank Regular Saver
Is The List Above Biased?
Of course it is. It is difficult to find a list that isn’t. It doesn’t say which is the best value, only what APY rate they have. Some of them may have massive maintenance fees, and others may demand a large minimum balance. There may also be 4000 other banks from around the world that offer less than the banks listed above. Nevertheless, you can see from the Discover website and from the list above that Discover doesn’t offer the very best rates, but it does beat a great many of its competitors.
There Are No Hidden Fees
They publish their fees on their homepage, though it does take a little quizzical deduction to see their $500 opening deposit because it only appears once on a comparison chart.
- No maintenance fees
- No minimum balance
- $500 opening deposit
- Monthly-compounded interest
- Free official bank checks
- $0 for expedited bank check delivery
- Free incoming wire transfers
- $15 for deposited item returns
- $15 for excessive withdrawals
- $15 to stop payment order for six months
- $30 per day for insufficient funds
They charge you $15 if you make more than six withdrawals per month. They do not mention the amount you withdraw, only the number of times you withdraw. If you continue to make more than six withdrawals per month, then they may freeze your account. If you continue, then they may close your account. You can draw out your entire savings in one withdrawal if you wish, but you will be charged if you do it via seven or more withdrawals in one month.
Compound Interest, Auto Saver Plans And A Mobile App
The compound monthly interest is very good. Compound interest means you are paid on your money and on the interest that your money earns. It rewards people who leave their money in the account longer.
Like all of the banks in the rates list, the Discover savings account is insured up to $250,000, so your money is safe if Discover goes bust. The company has 24/7 live customer support, and their app works on the iPhone, Blackberry devices and Android phones.
The Auto Saver plan is just an auto pay (direct debit order) that takes money from your checking account and puts it in your savings account. Your best bet is to have the money taken from your account the same day you are paid so you do not miss the money.
Conclusion – Should I Use Discover Savings Accounts?
They used to use the same marketing techniques that so fervently angered the online community with their Discover credit card. There are still reviews kicking around the Internet where people angrily explain how the Discover marketing department screwed them over.
A common complaint is that the company offered a $100 or $300 bonus payment for signing up for a Discover savings account. People then discovered that their account was open…but there was no bonus money. They were then told they had been disqualified for the promotion. Others had their account opened and it was then closed because they were incorrectly targeted for the bonus promotion.
At the time of writing, Discover are not using sleazy marketing tactics. Their homepage is viciously biased, but hopefully you can see through that bias thanks to the data in this article. They offer a good rate, and their saving tools are nice, but are only useful for people who have savings goals. If you are saving because it is the smart thing to do, or because you are self insuring, then their tools are of no use to you. The Discover savings account may not have the lowest APY rate, but their rate has remained the same for years–how many others can make such a boast? If you are looking for a savings account, you could do worse than the Discover savings account.