High Yield Savings Account - No Monthly Fees | Discover (2024)

FAQs

Does Discover high-yield savings have fees? ›

You'll never pay fees for the following:

Monthly maintenance. Official bank check. Excessive withdrawals.

Limited growth. While you can grow your money with a high-yield savings account, it's not the best way to generate long-term wealth for retirement because the yield often doesn't keep up with inflation. As a result, working with a broker or robo-advisor to develop an investment portfolio is better for long-range plans.

Some disadvantages of a high-yield savings account include few withdrawal options, limitations on how many monthly withdrawals you can make, and no access to a branch network if you need it. But for most people, these aren't major issues.

Cons Explained

No physical branch locations: Discover doesn't have any physical locations, and there's no ATM access if you don't also have a Discover checking account.

High-yield savings accounts are an excellent choice for building an emergency fund. They provide a safe place to store cash you might need readily available for unexpected expenses. Keeping three to six months' worth of living expenses in a high-yield account is a common guideline. Short-term goals.

With a Discover Online Savings Account, your withdrawal options include: Setting up electronic transfers between your Discover Online Savings Account and other internal or external bank accounts. Requesting a no-fee official bank check. Initiating an outgoing wire transfer.

As long as you're banking with an FDIC-protected bank, you're not risking losing your money when you deposit it into a high-yield savings account. However, the rate of inflation can be higher than your APY, resulting in a negative real return, or the return after taxes and inflation are taken into account.

Millionaires Like High-Yield Savings, but Not as Much as Other Accounts. Usually offering significantly more interest than a traditional savings account, high-yield savings accounts have blown up in popularity among everyone, including millionaires.

If you deposit $50,000 into a traditional savings account with a 0.46%, you'll earn just $230 in total interest after one year. But if you deposit that amount into a high-yield savings account with a 5.32% APY,* your one-year interest soars to over $2,660.

The interest you earn on a high-yield savings account—or any other savings account, money market account or certificate of deposit, for that matter—is subject to state and federal income taxes.

How much will $1,000 make in a high-yield savings account? ›

If you deposit $1,000 into a high-yield savings account with a 4.5% APY, you'll earn just over $45 in interest after one year. At 5% APY, you'd earn about $51. If you deposit $1,000 into a high-yield savings account with a 4.5% APY at age 20, you'll earn almost $6,100 in interest by age 65.

CDs typically offer higher interest rates than high-yield savings accounts — but they work a bit differently. With CDs, you typically make one lump sum deposit, which you agree to leave untouched for the term you select. Once the term is over, you can withdraw the money and the interest you earned without penalty.

While the Discover savings account interest rates aren't the absolute highest interest rates you can get, they are well above national averages. Discover is also a good choice for your savings account if you're looking to avoid fees.

FDIC-insured accounts, like those offered by FDIC member Discover Bank^®, are protected up to $250,000 per depositor, per account ownership category, in the unlikely event of a bank failure.

Discover Savings Interest Rates

Discover's online savings account offers an annual percentage yield (APY) of 4.25%, which is more than nine times the current national average of 0.50%. This account also has no fees and no minimum deposit or balance requirements.

The minimum could be based on a daily balance, monthly balance, or an average depending on the instituion. Not all high-yield savings accounts have a minimum balance. Maintenance fee - Some banks charge a monthly fee to maintain an HYSA, which decreases your return.

Funds on deposit at Discover Bank are FDIC-insured up to the maximum amount allowed by law. For more information, visit our FDIC information page.

Gaines reiterates that even most high-yield savings accounts lose value to inflation over time. “More than two months' worth of living expenses in a savings account is too much given the ability to earn around 5% from easily accessible money market accounts that should not fluctuate in price.”

We begin to impose interest charges on a transaction, fee or interest charge from the day we add it to the daily balance. We continue to impose interest charges until you pay the total amount you owe us.