When it comes to saving, sometimes consumers need an account to park the funds off for a short term before taking on a project. Term products such as CDs simply would not suffice, which makes a money market a good choice for savers. The Discover Bank Online Money Market account provides customers with access to high interest and flexible withdrawals. This review takes a look at the inner workings of this account, and how it compares to its peers. Read here to find out how Synchrony Bank rates.
A Brief History of Discover Bank
Attempting to launch a stand-alone financial product in 1988 might seem easy enough. However, when that product happens to be a credit card in a saturated market, it might seem a little reckless. What Discover realized was that it was important to distance themselves from the run-of-the-mill credit card products and packages. The decided to package the card differently and offer clients benefits they wouldn’t ordinarily receive from a credit card. These benefits were:
- World class service
- No monthly maintenance fees
- Cashback offers
These benefits were well received by the market, and the bank soon expanded to other products, perfecting them. Savings account became the fuel that fired their growing market. With some of the highest rates for their savings and checking products, Discover has managed to build a solid reputation in the market.
For a full review of Discover Bank, read here.
Why Choose A Money Market When the Online Savings Is There?
The online savings product is a remarkable product as it provides simple and easy access to funds while offering stellar interest rates. Th most significant difference between the two accounts is that customers don’t have to wait through the seven business days waiting period in order to have access to their funds.
With these two accounts, it’s a matter of choosing which option is the best for that moment. Customers tend to start off with the money market and once they’ve built up their funds, they move some over to the online savings. These two accounts are not considered competitors, but rather applicable during different life stages.
Once customers have their emergency savings in their money markets and online savings accounts, it’s time to start building up their longer term savings and look at CD options.
We recently did a review on Discover's savings accounts. Read here to find out more.
Features of a Discover Bank Online Money Market
This account is not only a great way to build up emergency savings, it also provides account holders with interest rates that are higher than the industry standard.
- There are two separate interest rate tiers. One for balances under $100,000 and one for balances over $100,000.
- Customers have access to their funds online, via cards, and checks.
- Furthermore, the account carries no monthly maintenance fees.
- Also, many of the transactions on the accounts are free as well.
- Customers have access to over 60,000 no fee ATMs across the U.S.
- The entire process of opening the account can take place online, or through telephone banking. The process only takes a few minutes.
- Customers have access to their accounts through mobile banking apps.
- Customers have instant access to their funds. Furthermore, the account restricts users to a maximum of 6 transactions per regulations. This will also encourage customers to save and not spend on a whim.
- Finally, customers are required to open the account with a minimum of $2,500. They are also required to maintain this amount as a minimum balance.
Read here how the Ally Bank Money Market compares.
Restrictions of the Discover Bank Online Money Market
Although this account provides easy access and is easy to open, there are a few restrictions that could make it expensive and at times even inaccessible.
- The opening deposit for the account is a massive $2,500. This could make it very difficult for potential customers to access the account. Furthermore, as a stepping stone into savings, this high opening deposit could cause customers to feel despondent about saving.
- Furthermore, the interest rates are favorable, however, there are some banks that provide a higher rate. This causes some healthy competition, however, would deter customers from moving their accounts over.
- Customers are restricted to 6 transactions per statement cycle as per regulations. Those who need to perform more actions, stand the chance of paying additional fees.
- Finally, customers who don’t maintain the $2,500 minimum balance, will pay a balance fee.
Pricing of the Discover Bank Online Money Market
- Minimum balance fees $10 – This fee is charged when the account has a balance lower than $2,500. Furthermore, this is charged once per statement cycle.
- Deposited item returned $15 – This fee is charged per item that is returned.
- Stop payment $15 – This fee is levied on instructions to stop checks or debits, and is charged per item.
- Excessive withdrawal fees $15 – Customers who perform transactions out of the six-transaction limit, pay this fee per item.
- Outgoing wire transfers $30 – Quite an excessive fee and is charged per item.
- Insufficient funds fee $30 – Another steep fee should the account go into a negative balance. Discover Bank limits this fee to once a day, though.
How To Open A Discover Bank Account
Customers will find the Open Account tab right at the top of the page in the right-hand corner. Once they select this option, they will be directed to a screen that displays the various account options available to them.
Step 1: Account and Amount
Customers select the type of account they wish to open, as well as the amount.
Step 2: Personal Info
Clients enter all their details such as full names, social security number, contact details, and more.
Step 3: Account Settings
This will provide the account holder with all the choices in terms of their account, such as online banking.
Step 4: Opening Deposit
The account owner decides how to proceed with the opening deposit.
Step 5: Disclosures
Customers acknowledge all the required disclosures before the finalization of the account.
What We Like About the Discover Bank Online Money Market Account
Customers who wish to have access to their savings a few times a month will find this account to meet their needs. The restrictions on the number of withdrawals make it easier for customers to forget about the money until they need it. This will allow them to build up their savings more effectively. Furthermore, the restricted access also helps customers curb their spending.
Furthermore, the high opening balance ensures that customers are more invested in their savings, as lower balances will attract a monthly balance rate. This is another means to motivate customers to save.
Interest rates are always a point of contention for savers, as there is always someone who will offer a better rate. This is the same with Discover Bank, however, they do offer a host of other benefits that will make the tiny fraction in the rate difference seem trivial.
All the fees are made known to the customer upfront, and there are limitations to some of the fees. This is not always the case with the other banks, especially the insufficient funds fee.
Finally, customers have access to the account through online channels, which means they never have to set foot in a bank again. The account is accessible through other channels such as mobile and telephone banking as well, which makes it a convenient choice.
What We Don’t Like About the Discover Online Money Market Account
With an opening deposit that size, a large portion of the population simply won’t be able to afford saving in this account. When they dip into those funds and it goes below the threshold, they pay the account fee. As this is an entry-level account, very few will enter the market to save.
The interest rate tiers are huge and only balances of over $100,000 earn a slightly higher rate. Once again, this makes it difficult for customers who find themselves in the lower to middle income group to feel motivated to save with this account.
Finally, with an opening deposit that high, you would expect the interest rate to be a bit more competitive. Some of Discover’s competitors offer a higher rate with a lower opening fee. This will hardly encourage consumers to go with this product.
Critical Reviews Rating of Discover Bank Online Money Market – 8 of 10
The biggest factor that concerns us with this product, is the opening deposit requirement for this account. Also, the fact that this balance needs to be maintained to avoid a monthly fee makes other offers from other banks far more attractive. Customers who already bank with Discover, will either be forced into an online savings account or another bank due to this barrier of entry.
The lower rate is the other reason for the reduced rating. This is something that simply cannot be ignored, especially with the very high deposit requirement. Either they would need to up the rate or drop the deposit requirement to gain a better rating. As it stands, this is the least attractive product in a stellar catalog.