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Note: CITBank is currently offering the highest rate for savings account – 2.45% APY with their Savings Builder account.
After doing a short summary on the top 5 CD rates, we found that CD rates are incredibly low compared to the past.
Not only that, but if interest rates ever rise, we can’t withdraw our funds too early unless we want to incur a penalty.
CDs require you to leave money in your account for an extended period of time at a fixed rate before you can withdraw.
This leaves us with the question of where we should park our money in the meantime.
For those of you looking to find a safe way with 0% risk to place your capital, a savings account has always been a decent option. Yet just like CD rates, the amount of money you get back isn’t going to be that high.
However, Discover Bank offers a savings account with one of the highest rates out of any other bank, with over 5x the national average.
More About Discover Bank
Unlike most banks, Discover does not have a physical location. They try to make up for this by offering great incentives such as an excellent shopping portal with high cash back and double cash back promotions
Now they’ve come out with a 0.95% APY savings rate account with only a minimum deposit of $500. While it may not seem like a lot, there’s no commitment and you can withdraw your money at anytime. Interest is compounded on a daily basis, so even if you withdraw your money the next day you’re still going to get paid.
If you think this rate is low, let’s take a look at how it compares with other banks out there:
From the image below we can see that Discover wins by a landslide. With a $5,000 deposit, expect to earn $47.73 per year in interest compared with a measly $.50 cents from other, more common banks. The best part? There’s no monthly fee. Discover is really pushing you to sign-up for their savings account.
The only downside is that you do need a minimum of $500 dollars to open an account, while other banks usually don’t require such a high amount. However, this isn’t outrageously high, and if you’re already starting to save money, you’re more than likely going to get to this amount very quickly.
Are There Any Hidden Fees?
With such a wide gap in interest rates between a Discover Savings Account and other banks, I had to check if there are any hidden fees. While yes there are fees, Discover does not keep them a secret from you. We can see from the image below what they do charge on.
One thing that I personally enjoy is that you can get free checks and have them expedited to your doorstep. Chase bank usually charges me $5 – $10 dollars for a book of checks. Another positive is that you can scan checks via their mobile app and have them deposited into your account within 48 hours.
How Do I Sign-Up?
Signing-up for a Discover Savings Account can usually be done in just under 5 minutes.
1. Enter your information. Click here to sign-up for a new account. Enter your information that is typical of signing-up for a new savings account. This includes your taxpayer ID, address, name, phone and email.
2. Fund your account. You can fund your account by linking a bank directly with your Discover Savings account, or you can scan a check via their mobile app with a minimum deposit of $500 to get started.
3. Wait for confirmation. Once the first 2 steps are completed, wait for their confirmation email to confirm that your account is setup and ready to use. They’ll also send you a welcome kit which will explain the benefits to having a Discover Savings Account.
If you need a place to park your money while you think about what to do with it, placing it in a (relatively) high-rate savings account with Discover isn’t a bad idea. This way you’re still earning a little bit of cash without the hassle of monthly fees like other banks. If another bank comes out with a higher rate, you can always move your cash the next day.
If you’re looking for more ways to save with Discover, we recommend the following:
- The Discover It Card Can Get You 18.5% Cash Back On All Amazon Purchases
- How To Get 10% Off Whole Foods Market Purchases With The Discover It Card
- Now Get 2% – 10% Cash Back On All Purchases When You Go With Discover
- Discover Checking Now Offers A $50 Sign-up Bonus
- Discover Has One Of The Best Shopping Portals On The Web
If you have any questions or thoughts about the Discover Savings Account, feel free to leave them in the comments below. We always love responding. Thanks for reading and happy frugaling!
My name is Jason Wuerch and I'm currently located in Madrid, Spain running a personal finance blog called Frugal For Less. My goal is to help everyone and anyone willing to make and save money through easy and simple ways that don't require much effort. Just because you're frugal doesn't mean you have to give up life's luxuries.