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Discover Bank vs. Ally Bank

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Discover Bank vs. Ally Bank

If you’re looking for the highest savings interest rates the industry can offer, you’ll want to turn to an online bank. Without the maintenance costs of physical branches, online banks can offer the most competitive rates – not only on savings accounts but also on certificates of deposit, money market accounts and even checking accounts. Discover and Ally are two online banks with consistently high rates, and each offers a range of consumer-friendly features and product offerings. Here’s how they compare.

Consider working with a financial advisor for insights and guidance on picking a bank.

Who Should Use Discover® Bank?

With a wide range of account offerings, Discover Bank is great for customers who want to keep all of their bank accounts together with one bank. That’s especially true if you already have a Discover credit card or are considering getting one. Keeping multiple accounts under one roof means you only need to visit one website to manage your money.

The Discover website offers a full suite of online banking services, allowing you to transfer money, monitor account activity, pay bills, and more. You’ll also have mobile access through the Discover mobile app, as well as through your mobile internet browser. The mobile app allows you to easily deposit checks by photographing them, pay bills with Bill Payment Service, redeem your Cashback Bonus, check on account balances and more.

If you have concerns about doing your banking online or through an app, you can rest assured that Discover keeps your money safe through SSL encryption and fingerprint and passcode security.

Who Should Use Ally Bank?

Ally Bank is great for customers who don’t need physical branches, are seeking to grow their savings substantially and want the option to open multiple kinds of accounts.

Ally offers some of the best APYs in the industry. For example, the bank’s CDs offer APYs as high as 5.15%, though they can reach as low as 3.00% too. Ally’s Online Savings Account also features a solid 4.25% APY, as well as decent rates for the bank’s Interest Checking and Money Market accounts.

Ally does work hard to fill in the gaps where physical locations would otherwise be. It does this with excellent and thorough online and mobile banking features. You can easily access your account(s) with your online banking information. You’ll also have access to more than 55,000 Allpoint® ATMs throughout the U.S.

Discover Bank vs. Ally Bank: Products

Discover Bank vs. Ally Bank

Both Discover and Ally offer a great variety of accounts. This includes savings accounts, certificates of deposit at various terms and rates, money market accounts, checking accounts and IRAs. Neither bank’s savings account requires a minimum deposit to open.

Ally Bank

Ally’s Online Savings Account also features a solid 4.25% APY, as well as decent rates for the bank’s Interest Checking and Money Market accounts. Its checking account earns interest at competitive rates.

The bank offers three types of CDs, each with its own terms and some of the best CD rates. For example, Ally’s CDs offer APYs as high as 5.15%, though they can reach as low as 3.00%, too. Ally’s No Penalty CD forgoes the hefty penalty you would typically face for early withdrawal of a CD’s funds. This offers customers the opportunity to find the best kind of account for each financial preference and situation.

Ally does work hard to fill in the gaps where physical locations would otherwise be. It does this with excellent and thorough online and mobile banking features. You can easily access your account(s) with your online banking information. You’ll also have access to more than 55,000 Allpoint® ATMs throughout the U.S.

Discover Bank

Discover provides convenience with over 60,000 no-fee ATMs and free online and mobile banking. Online, you can transfer money, pay bills and simply check on your accounts. With mobile, you can also deposit checks on the go.

Its checking account is unique in that it earns cashback rewards. You earn 1% cash back on purchases you make with your Discover® debit card, though you’re limited to earning cash back on the first $3,000 you spend each month. Still, that can help boost your savings, especially in conjunction with a savings account.

However, Discover requires an opening deposit of at least $2,500 to open a CD account or a money market account. Its online savings account doesn’t come with many perks. However, its high interest rate makes up for that. The account’s rate climbs well above the national average and most big banks’ rates. The account compounds interest daily and pays it monthly.

You also get to keep your earnings since the account doesn’t charge fees for things like low balances, checks, incoming wire transfers, deposited items returned and more. You can, however, face a $30 fee for each outgoing wire transfer. You have the option of using this savings account as overdraft protection for a checking account. There are no fees for overdraft protection services.

Discover Bank vs. Ally Bank: Fees

Both Discover and Ally are customer-friendly when it comes to fees, and both banks are transparent about their other fees.

Ally Bank

Ally Bank, which doesn’t charge monthly service fees on any of its accounts, doesn’t charge monthly fees or require a minimum deposit amount for any accounts. This makes each account much more accessible to customers who may otherwise be unable to open such favorable accounts. It also ensures your money will grow unharmed by the bank’s fees.

Ally customers have access to thousands of ATMs nationwide, both Ally branded ATMs and those within the Allpoint ATM network. Ally will even reimburse up to $10 of other ATM’s fees each statement cycle.

Discover Bank

Discover won’t charge you for bank checks, incoming wire transfers and deposited items returned. You may face fees for excessive withdrawals, stop payments, insufficient funds and outgoing wires. At Ally, you’ll face fees for returned deposit items, excessive transactions, expedited delivery, outgoing domestic wires and overdrafts (both paid items and returned items).

Discover Bank vs. Ally Bank: Rates

Discover Bank vs. Ally Bank

As prominent online banks, customes of Discover and Ally both earn at competitive interest rates on all accounts.

Ally’s savings account offers a 4.25% APY. Ally’s best CD rates come with its 1- to 5-year accounts. It’s money market accounts and interest-bearing checking accounts earn interest according to balance tiers. This means that your rate depends on your account balance. Ally’s High-Yield CDs and No Penalty CDs also earn based on balance tiers. Luckily, even the lowest balances earn at competitive rates.

Discover® CD does not vary its rates based on account balance. Discover® Money Market Account offers 4.20% APY or 4.25% APY.

The Takeaway

Discover Bank generally wins on rates, and it also gets points for a favorable fee schedule and a wide account selection. The only potential downside is that Discover requires a minimum deposit to open a CD or money market account; by contrast, Ally does not require a minimum deposit on any of its various accounts.

In terms of accessibility, however, you won’t have trouble with either Discover or Ally. Despite their lack of branches, the online, mobile and ATM offerings will give you constant and convenient access to your money. Remember, too, that customers of both banks enjoy FDIC insurance up to $250,000.

Tips for Choosing a Bank

  • For more help with your finances, start working with a financial advisor. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • When choosing a bank, it’s all about determining your own banking needs and habits. Do you need a free checking account? Are you looking for the best possible savings rate? Or is having nearby branches more important to you? The right one can help you maximize your savings, especially when it comes to saving for retirement.

Photo credit: ©iStock.com/martin-dm, ©iStock.com/Squaredpixels, ©iStock.com/Eva-Katalin

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