PROS / Discover Bank has a great free checking account, especially if you frequently use your debit card and want to earn cash back without maintaining a high balance.
CONS / It doesn't reimburse fees from out-of-network ATMs.
VERDICT / With its innovative reward checking account, good interest rates on deposit accounts and strong credit card offerings, Discover Bank is a fantastic choice for your online-only banking.
Although best known for its credit cards, Discover Bank provides a wide range of online banking services, including both credit and deposit products. It extends a variety of loans, and it provides checking accounts, money market accounts and CDs that pay interest rates on par with the best online only banks we reviewed. For these reasons Discover Bank receives our Top Ten Reviews Bronze Award.
Discover Bank offers free checking with its Cashback Checking account, which means there's no monthly fee and no minimum balance to maintain. Like many of the free checking accounts we reviewed, it’s a reward checking account; however, it's unique in that instead of paying an interest rate on your account balance, it pays you $0.10 for each debit card purchase, online bill payment and cleared check, up to 100 transactions per month. This rewards structure is a terrific option if you frequently use your checking account but don't necessarily want to maintain a high balance in order to earn interest.
The minimum opening deposit for Discover Bank's online savings account is $500, but there's no minimum balance requirement. It pays higher interest rates for this type of account than most of the other online-only banks we reviewed. Like all online savings accounts, you're limited to six withdrawals or transfers per month and there's a $15 excessive withdrawal penalty for each transaction above this limit.
The money market account is a little more expensive to open and maintain, as it requires an opening deposit and a minimum balance of $2,500. Like the savings account, you're limited to six transactions per month and incur an excessive withdrawal penalty for each additional transaction. Discover Bank pays a higher-than-average interest rate for its 3-month CD and offers terms up to 10 years. Its 60-month CD also pays a higher than average return. The minimum deposit for a CD account is $2,500. Like most CD accounts, there is a penalty if you decide to withdraw your funds before the term expires.
You can procure several different types of loan products from Discover Bank, including mortgages, refinancing, home equity loans, personal loans and student loans.
Mobile banking is available, and this online only bank provides free online statements and accepts direct deposits. A variety of financial tools and calculators that you can use to analyze your spending are available on its website. Financial education articles and budgeting tips are also offered. Your deposited funds are fully available to you within one to four business days. Discover Bank gives you access to surcharge-free ATMs with the Allpoint and MoneyPass networks, but it doesn't reimburse fees if you use an out-of-network ATM.
Security & Support
Discover Bank is FDIC insured, which means that if the bank fails, you can recover your money. It uses two-factor authentication to protect your online account, which means that if it doesn't recognize the device you log into your account with, it will ask you to confirm your identity by providing answers to security questions. You can set up your account to notify you when certain activities occur on your account. Customer service is available by phone 24 hours a day, seven days a week.
Discover Bank ranks among the best online only banks we reviewed due to its unique free checking account, good interest rates on its deposit accounts and wide range of banking services. It offers mobile banking for Apple, Android and Kindle devices and gives you access to a large network of surcharge-free ATMs. It's a terrific choice for your internet banking.