Ally Bank vs. Discover Bank: Which Is Right for You?

If you are looking for the highest savings interest rates the industry can offer, you may want to turn to an online bank. Without the maintenance costs of physical branches, online banks could 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 and pay bills. 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 and check on account balances.

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 do not need physical branches, are seeking to grow their savings substantially and want the option to open multiple types of accounts.

Ally offers some of the best APYs in the industry. For example, the bank’s CDs offer APYs as high as 4.00%. Ally’s Online Savings Account also features a solid 3.60% APY, which is the same as the Money Market account. Even the bank’s Interest Checking account features a competitive rate.

Ally does work hard to fill in the gaps where physical locations would otherwise be. It does this with thorough online and mobile banking features. You can easily access your account(s) with your online banking information. You also have access to more than 75,000 Allpoint® ATMs throughout the U.S.

Discover Bank vs. Ally Bank: Products

A man signing up for an online bank account.

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 3.60% 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 4.00%, though they can reach as low as 2.90%, 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 type 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 online and mobile banking features. You can easily access your account with your online banking information. You will also have access to more than 75,000 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, although you are 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.

Discover requires no minimum opening deposit for a CD account and money market account. Its online savings account does not 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 does not 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 has no monthly service fees on any of its accounts, does not 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 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

A man comparing bank apps on his mobile phone.

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

Ally’s savings account offers a 3.60% APY. Ally’s best CD rates come with its six- to 18-month accounts. Its 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.

The Discover CD does not vary its rates based on account balance. The Discover Money Market Account offers 3.50% APY or 3.55% APY.

Bottom Line

Discover Bank usually offers higher interest rates and has a strong selection of accounts with few fees, though it does require a minimum deposit for CDs and money market accounts. Ally doesn’t have those minimums, making it easier to open an account. Both banks are fully online, but they still provide easy access through mobile apps, online banking, and ATM networks. Accounts at either bank are FDIC insured 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 vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel 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.