An online savings account is a valuable tool for any investor to have. Online savings accounts are good for storing up emergency funds in case of job loss, hardship, or some other financial catastrophe. These accounts are useful because they are guaranteed by the FDIC and offer protection against riskier investments that have the potential to decline in value.Discover Bank is a relatively new bank that I stumbled across over online. I was not even aware that Discover had a banking portion. I was only familiar with the company’s credit card services. Discover started offering banking services over the past few years and released its first debit card in 2006.
Discover Bank Features:
Discover has been around for over 26 years. The company was founded in 1985 as a subsidiary of Sears Holdings. Today, Discover is an independent company that is publicly traded on the open market.
Online Savings Accounts
Discover has an online savings account that pays higher interest rates than most commercial banks. The company is currently paying a 0.80% interest rate. This rate is five times the national average being offered by most banks. Discover has no minimum balance requirement but does require $500 to open a new account. Interest is compounded daily.
Money Market Accounts
The money market accounts at Discover Bank are very similar to the savings account at Discover. The promary difference is that it takes a higher balance to open a money market account. The minimum balance to open a Discover money market account is $2,500. These accounts pay slightly higher rates than traditional money market accounts. Money market accounts enable you to access your money via debit cards, credit cards, checks, and ATM withdrawals.
Certificates of Deposit
A Discover Bank CD takes a minimum deposit of $2,500 to open an account. CD terms vary from a period of 3 months to 10 years. Three month CD’s are much more liquid but pay lower rates. Long term CD’s pay higher interest rates because capital is tied up for a longer time period.
IRA Certificates of Deposit
Discover Bank offers retirement options for both Roth and Traditional IRA’s. CD’s can be rolled up into Discover IRA accounts. This is similar to the options that are offered by credit unions, banks, and financial institutions.
Mobile Banking Apps
Most banks today have a mobile banking application that customers can use to perform transactions from their smart phones. Discover is no different. The company has a real easy to use app that can be downloaded for free. You can check interest earned, view recent activity, set up transfers, and view balances quickly.
Discover Bank Review
This is a bank that I have not personally opened an account at before. Discover is similar to the banking services that are offered by ING Direct and Ally Bank.
Discover Bank still has some pretty solid rates on their products compared to what other online banks are offering. The rates are better than you will find at any of those big commercial banks. I do think that the minimum amount to open an account could be lower as some banks only require $1 or more to get started.
I found that the long term rates on CD products are really attractive for the current environment. This is a tough market for investors to get any decent rates on fixed income products and guaranteed securities. A 2 to 3% rate is solid in this low yield environment.