The money market is a nice place to invest money you don’t plan on using soon. It’s also a nice choice when looking to grow your portfolio. You can invest in the money market by operating a money market account in a reputable bank like Discover Bank.
Being fully online, everyone in the US can open an account, and since it’s a full member of FDIC, you can be sure your money is safe.
Apart from the security, making deposits and accessing your money is easy since the bank gives you access to over 415,000 ATMs countrywide. While the bank doesn’t have physical branches, it offers excellent customer products and services. One of the most popular products from Discover Bank is the money market account, which we’ll delve into in this article.
What is a Discover Bank Money Account?
Discover Bank Money is an interest-bearing account offered by a bank or credit union. Unlike ordinary saving accounts, MMAs provide higher interest rates and other benefits.
For instance, with the Discovery Bank money market, you enjoy a higher annual percentage yield (APY) than the national average. In 2022, while the average national interest was 0.23%, Discovery Bank offered an interest ranging from 4.20% to 4.25%, depending on your bank account balance.
Discover Bank Money Market Account Review
Investing in a Discover bank money account is highly rewarding, which makes it ideal, especially if you are looking for short-term and long-term gains. Whether you are planning to invest a small or huge amount, interest depends on the amount you have in the account.
Here are the key Discover bank money market account benefits:
- High Annual Percentage Yield
One of the main benefits of being an MMA holder in Discovery Bank is the huge interest payout. The interest is divided into two categories: accounts with less than $100,000 and those with more than $100,000. The interest rate for those with less than the stated amount is 4.20%, and for those with more than this amount, the rate is 4.25%.
For example, if you have an account with $1000, the earned interest will be $42. Ideally, the more money you have in your account, the higher the payouts.
Since the bank allows you to save for more than one year, you can also allow the money to grow for several years. This means if you have a plan for 5 years, it will have accumulated a substantial interest. For example, $100,000 will have accumulated to $123,135 when the period elapses.
- Reduced Bank Fees
Discover Bank operates exclusively online. Eliminating physical branches reduces the operation cost associated with running a conventional bank. This, in turn, facilitates reduction of the transaction and other involved charges.
The Discover Bank money market fees are highly accommodative. The only charges you will encounter are during wire transfers, costing $30 per transaction. For other services like withdrawing money from over 60,000 bank machines, no charges are involved. However, when withdrawing from other ATMs, you are subject to operator charges.
Other free services include debit card replacement, insufficient account balance, online bill payments, and monthly maintenance. Basically, most of the services chargeable by other banks are free at Discover Bank.
- Enhanced Account Safety
Online banking is efficient, and most banks are heading that way. But there are also a few risks like rising levels of scams and fraud. The good thing is Discover Bank has an elaborate banking security system that ensures all online banking threats are well countered.
The bank is a member of the Federal Deposit Insurance Corporation (FDIC); therefore, it abides by all the rules governing banks regarding the safety of customers’ data and their money. The role of this government agency is to ensure that every bank adheres to the laid measures to safeguard customers.
Apart from adhering to the FDIC regulations, the bank employs the latest technology to ensure customer protection and a top-notch experience. The features include high-level automation, encryption, and proactive fraud protection.
Opening Discover Bank Money Market Account
Opening a Discover Bank money market account is easy. Unlike conventional banks, there is less paperwork since the process is entirely online. Also, you can open an account by calling Discover Bank.
To open your account, you are required to submit the following.
1. Personal Details
- Important details like name, date of birth, income, employment status, and tax identification, among others, that the bank might deem necessary.
- Partner information if you are opening a joint account.
- Next of kin details
- Fill in whether you want a checkbook when opening an account
- The amount you want to deposit in your account
2. Account Verification
Once you submit the required details, you need to verify your account. The verification process involves uploading a document that confirms your details, like utility bills or any other relevant document.
3. Fund Your New Account
After verifying your account, you have to deposit funds to activate it and start earning interest. Typically, Discover bank money market minimum balance is $2500. However, the bank can allow you to open an account and deposit the minimum amount later.
How Does Discover Bank MMA Compare to Others?
1. Money Market Account vs. Savings Account
If you compare Discover Bank money market vs. savings, they are slightly different, though they have similar goals. MMA accounts usually offer huge interest, which benefits anyone looking to grow their money while still accessing their funds when needed. The bank doesn’t limit the number of withdrawals you can make or transact.
On the other hand, a savings account aims at long-term investment and limits the number and amount you can withdraw or transfer. Savings account main aim is to keep your money that you aren’t using in the near future. The money earns interest but at a lower rate than MMA.
2. Discover MMA vs. Other Banks
How does the bank compare to others? The Discover Bank money market interest rate is impressive and one of the highest in the US. The account offers up to a 4.25% interest rate, which is way higher than the national average of 0.23%. It means investing your money in Discover Bank MMA will reap bigger than in most banks.
3. Discover MMA vs. Mutual Funds
You might be wondering which is better between Discover MMA and mutual fund. The MMA account offers more security and other flexible features that are unavailable in mutual funds. MMA accounts usually come with FDIC insurance, while mutual fund doesn’t. Also, mutual funds have a limit on the number of withdrawals one can make. However, there are no Discover bank money market withdrawal limits, which gives you more leverage and control over your money.
Although mutual accounts have more limits, they generally offer higher interest than money market accounts.
Discover Bank Money Market Access
Accessing your money in Discover Bank is easy. Considering that the bank offers services online, over-the-counter withdrawal or deposit services aren’t available. Customers are capable of accessing their funds through the following ways;
1. ATM Withdrawals
The bank has over 60,000 ATMs nationwide where you can withdraw your funds free of charge. Also, you can use other machines, but operating charges apply.
2. Debit Card
Being an account holder at Discover Bank, you can opt for a debit card. It allows you to pay your bills by swiping your card.
Once you open an account, Discover Bank issues you with a checkbook. You can use it to settle your bill or other payments like a regular bank check.
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Advantages and Disadvantages of Discover Money Market Account
Opening Discover MMA comes with ups and downs. Some of the Discover Bank money market advantages are listed below.
- High-interest rates
- Easy account access
- Zero account maintenance fee
The following are Discover bank money market disadvantages.
- High minimum amount
- No physical branches
Discover Money Market Account Alternatives
If you want to broaden your investment, you can supplement your Discovery bank high-yield money market account with another option. Some of the banking alternatives with high returns are featured below.
1. Government Bonds
Bonds are some great investment opportunities that can supplement your MMA account. They are offered by the US government, meaning high security and returns. Although they are high-return investments, they are long-term, unlike money markets. Thus, you can’t withdraw your money until the bonds mature. Redeeming bonds early, you will lose 3 months of interest.
2. Treasury Bills (T-Bills)
Treasury bills are an excellent investment if you want to invest in government funds for a short term. Usually, T-Bills mature in one year or less and are backed by the government. Therefore, you can invest your money without doubts since they are risk-free.
Besides the MMA alternatives, you can also find out about banking apps with referral bonus to add more bucks to your wallet.
Is Discover Bank Money Account Worth It?
If investing in an MMA has been in your mind for a long, you can now invest confidently. Discover bank money market account lets you earn more interest than a regular savings account. With more benefits than a regular savings account and other investment options, Discover money market account gives you an upper hand in income generation.
Whether you want to invest for the long or short term, it’s easy to enjoy a good income by joining a money market account. Although accounts provide significant benefits, it’s also worth evaluating the disadvantages these accounts might carry to make the right decision.