This Bank Has Raised the Interest On Its Savings Account — Again

Photo by Melpomene /

Discover Bank once again has increased the interest rate for its online savings account. This increase caught our attention because it means Discover Bank now pays more interest than most other banks today — as much as a 1.75 percent annual percentage yield.

Sound good? Click here to learn more or open an account.

The increase also serves as a reminder of the importance of periodically surveying interest rates to see if it’s worthwhile to switch banks — especially now that the Federal Reserve System’s benchmark federal funds rate is on the rise.

As we explained when the Federal Reserve last raised the federal funds rate in June:

If you have savings set aside, make sure you’re earning as much interest on it as your situation allows. That could mean moving your savings account to a bank that’s paying more for the same type of account, for example. Or, it could mean putting money in a CD.

This cause and effect plays out gradually, though. So don’t expect to see a bunch of banks make steep increases in their interest rates overnight the next time the Fed raises its federal funds rate.

Still, the importance of periodically comparing rates stands. After all, compound interest is one of your greatest allies in building wealth.

Discover Bank raises APY

Discover Bank is an online bank. It’s part of Discover Financial Services, the company that issues the Discover credit card, among other banking and payment products and services.

Recently, Discover Bank increased the annual percentage yield, or APY, on its online savings account to 1.75 percent. As we explain in “Money Lingo You Need to Know for Financial Survival,” APY is the yearly amount you earn on savings, including compounded interest. You should compare APYs when shopping for savings accounts, among other financial products.

Other perks of Discover Bank’s online savings account include a no-minimum-required opening deposit and no monthly maintenance fees. Check out the website for more details or to open an account.

Switching to an online bank

It’s no coincidence that looking for an online bank is among the “10 Tips for Finding a Bank With More Bang for Your Buck” and “14 Ways to Avoid Paying Irritating Bank Fees.” As the latter story explains:

… because online banks have lower overhead, they can afford to charge you less.

If you’re considering switching banks, check out our step-by-step guide — “5 Simple Steps to Painlessly Switch Banks.”

If you’d like to get more ideas on making, saving and managing your money, sign up for our free newsletter! You’ll be glad you did.

Earn money when you shop — plus a free $10 bonus

Earn extra money by using Rakuten (formerly known as Ebates) — a site where you can earn up to 40% cash back at more than 2,500 stores. As a bonus for joining Rakuten, you'll earn $10 when you spend at least $25 within the first 90 days. Start earning cash back and claim a free $10 bonus today.

This Is the Best Used Car You Can Buy
This Is the Best Used Car You Can Buy

This car combines reliability, safety and long-lasting value.

3 Reasons You Can’t Rely on Medicare Alone
3 Reasons You Can’t Rely on Medicare Alone

Counting on Medicare to cover health care costs can jeopardize your retirement plans.

These Are the 9 Best Benefits of Amazon Prime
These Are the 9 Best Benefits of Amazon Prime

These top-notch perks of an Amazon Prime membership won’t cost you a dime extra.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.