Discover Online Savings Account review: Excellent for those with lots of savings

A high-yield savings account is an important part of any personal finance toolkit — a place to stash your emergency fund, save for a down payment on a house, or collect your pennies for a new car or vacation. I use my high-yield savings account for my rainy day fund, as well as to save up for Christmas travel and other predictable but non-standard expenses.

If you’ve been putting off opening a savings account — or it’s time to trade in your current savings account for a better one — consider the Discover Online Savings Account, where you can earn 3.90% APY.

Discover Online Savings overview

Banking online has gone from a convenience to practically a necessity. I can’t remember the last time I actually crossed the threshold of a brick-and-mortar bank. There’s rarely a need any longer.

Discover knows this — and it offers a completely digital experience. In fact, Discover doesn’t even have physical branches. There’s no need for them with such a customer-friendly platform via both its mobile app and its website.

Here are some important elements of a Discover Online Savings Account:

• 3.90% interest is compounded daily and applied monthly
• No monthly fees
• No insufficient funds fees
• No minimum balance required to open account
• 6 qualified withdrawals per month
• The award-winning customer service you would expect from Discover

In-depth review

Annual percentage yield

Annual percentage yield (APY) is what the bank pays you for keeping your money with them.

Per the FDIC, the average savings account APY is 0.13%. The Discover Online Savings Account offers a significantly higher 3.90% APY. In other words, if you were to keep $10,000 in your account for one year, you could earn $170 in interest back. This feature alone is one of the biggest reasons to open a savings account with Discover.

However, just because Discover’s APY trounces competitors such as Chase, Citi, and Bank of America, you can still find better rates with a bit of searching — some of which exceed a 2% return.

Read more: Best high-yield savings accounts compared

Free ATM withdrawals

When you open a Discover Cashback Debit card with your savings account, you’ll have access to more than 415,000 ATMs. That’s an absurd amount — though not all of them are free to use. You’ll have access to 60,000 ATMs that won’t slap a fee onto your transaction.

No fees

Discover prides itself on its lack of fees that other banks often charge. For example, you won’t be charged for:

• Monthly maintenance (sometimes incurred when you’ve got only a small amount of money in your savings account)
• Official bank checks, including expedited delivery
• Deposited item returned
• Excessive withdrawal fee (up to six per calendar month)
• Stop payment orders
• Insufficient funds
• Account closure

In other words, Discover won’t nickel-and-dime you just for the privilege of letting them store your money for you. This is an important attribute of a bank.

Mobile app

The Discover mobile app is simple to use and has a couple nifty features worth mentioning:

• Ease of use — You can set up the app to require a password each time you log in, or you can enable face recognition or touch ID. You can even activate “Quick View,” which allows you to check your balance without logging in.
• Mobile check deposits — You can deposit checks by taking a picture of them and submitting the pictures through the app.

24/7 customer service

One reason you may be disenchanted with other banks is the fact that many have strict operating hours. If you need to talk to a human being, you may have to wait until the next morning. Discover has customer service around the clock at 800-347-7000.

How to open a Discover Online Savings Account

To open a Discover Online Savings Account, you can click on the orange “Open Account” button at the top of this page.

Before you begin your application, Discover will ask you if you’re already a Discover customer. If you’ve already got a credit card, checking account, or other affiliation with Discover, it will expedite the process for you by automatically entering the information it’s already got on you. If you’re new to Discover, you’ll have to enter details such as your name, date of birth, Social Security number, mother’s maiden name, etc.

It’s wise to look around for a promo code that you can enter while opening your account for the ability to earn bonus cash back after meeting various requirements.

Who should use a Discover Online Savings Account?

If you feel comfortable doing the entirety of your banking online, the Discover Online Savings Account is one of your better options.

Some people still feel that banking online is more susceptible to hackers, but the truth of the matter is your information is online whether you yourself bank online or not.

Also, if you plan to park a large dollar amount in a savings account, you’ll benefit from Discover’s sky-high APY.

Who shouldn’t use a Discover Online Savings Account?

If you’d prefer to visit bank branches to do your business, this is not the bank for you.

Also, if you don’t have much savings to speak of, don’t get too distracted by Discover’s high APY. Better to choose an account with features that appeal to you (perhaps Chime’s ability to round up purchases to the nearest dollar to help you bolster your savings).

Discover Online Savings Account vs. competitors

Chime^®

• APY: 2.00%⁷
• Monthly fees: None
• Minimum opening deposit: None

Chime is not a bank. It’s just a digital “storefront” of sorts for Bancorp Bank and Stride Bank (both members FDIC). Because of this, Chime has no physical branches (similarly to Discover).

Chime doesn’t charge monthly fees, and it’s also got a few neat features that Discover does not:

• You can get your paycheck up to two days³ earlier than some co-workers when you set up direct deposit with your employer. Chime will make funds available to you as soon as your employer has initiated a deposit.
• You can ask Chime to “round up” the purchases you make with your Chime Visa® Debit Card to the nearest dollar. Chime will put the excess money into your savings account, helping you to save faster in increments that aren’t a shock to your wallet.
• Chime can also automatically transfer 10% of each paycheck into your savings account.¹

Note that a Chime Checking Account is required to be eligible for their Savings Account. Only the Chime Savings Account accrues APY at a rate of 2.00%⁷. If you’ve got a Chime Checking account, you’ll get no APY.

Visit Chime or read our full review.

* Chime is a financial technology company, not a bank. Banking services provided by The Bancorp Bank, N.A. or Stride Bank, N.A.; Members FDIC. Credit Builder card issued by Stride Bank, N.A.
¹ Save When I Get Paid automatically transfers 10% of your direct deposits of $500 or more from your Checking Account into your savings account.
³ Early access to direct deposit funds depends on the timing of the submission of the payment file from the payer. We generally make these funds available on the day the payment file is received, which may be up to 2 days earlier than the scheduled payment date.
⁷ The Annual Percentage Yield ("APY") for the Chime Savings Account is variable and may change at any time. The disclosed APY is effective as of November 17, 2022. No minimum balance required. Must have $0.01 in savings to earn interest.

CIT Savings Builder

• APY: Up to 1.00%
• Monthly fees: None
• Minimum opening deposit: $100

CIT is a division of First Citizens Bank. With the CIT Savings Builder, you won’t find any monthly maintenance fees (though you must have a minimum deposit of $100 to open an account), and you can make free transfers to any bank account within the U.S.

The CIT Savings Builder offers up to 1.00% APY — but with a decent-sized caveat. To receive this return rate, you must either:

• Deposit and maintain $25,000 or more in your account; or
• Deposit $100 per month into your account.

Most of us will probably opt for the second requirement. But if you can’t spare $100 per month to put in a savings account, the CIT Bank Savings Builder probably isn’t for you. See details here.

Visit CIT Bank or read our full review.

Summary

The Discover Online Savings Account is hard (but not impossible) to beat when it comes to the annual percentage yield you’ll receive for your money. That is to say, letting your savings sit in this account is one of the best ways to make your money work for you — provided you haven’t got ample stock market savvy.

Discover is very customer-friendly, and won’t charge you for little things like monthly account maintenance fees and overdraft fees. It’s one of the best savings accounts on the market.

Read more:

• Best online savings accounts
• Investing vs. saving: Which should you do, when, and how?