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Discover vs. Capital One: Which credit card giant is the better bank?
Discover Bank and Capital One are often recognized as credit card giants, but these financial institutions offer banking products and services as well. And they’re both known for providing fee-free online accounts with competitive interest rates.
If you’re looking for a new bank, you might be wondering which is better: Discover vs. Capital One. Read on to learn more about the key features and differences between Discover and Capital One’s offerings.
Discover vs. Capital One: General overview
About Discover
Founded in 1986, Discover Bank offers a wide range of credit cards, including rewards credit cards, credit cards for building credit, fee-free credit cards, as well as several online bank accounts. This includes a cash-back checking account, a high-yield savings account, certificates of deposit (CDs), money market accounts (MMAs), and retirement accounts.
Read our full review of Discover Bank
About Capital One
Capital One was founded in 1994 as a credit card company and has since expanded its offerings to include a full suite of banking products and services for consumers and businesses. These include savings accounts, checking accounts, and more. Capital One also gives customers access to an extensive library of educational resources and credit tools.
Read our full review of Capital One
Discover vs. Capital One: Deposit account options
Checking accounts
If you’re searching for a checking account that earns interest, Capital One is the clear winner. Even though it offers a conservative 0.10% APY, that’s still more than the current national average rate for interest-bearing checking accounts.
Discover’s checking account does not earn interest, but it does make up for that by offering 1% cash back on up to $3,000 in debit card purchases each month.
There are no overdraft fees, monthly maintenance fees, or minimum balances associated with either account. Both of these checking accounts made our top 10 list of the best free checking accounts available today.
Savings accounts
Capital One and Discover have similar offerings when it comes to savings accounts. Both accounts offer a competitive 4.00% APY, which is more than eight times the national average. Neither account charges a monthly mainenance fee or requires a minimum balance.
The main difference between these two accounts is that Discover is currently offering a welcome bonus of up to $200 if you meet certain criteria.
See our picks for the 10 best high-yield savings accounts today>>
Certificates of deposit (CDs)
As far as CDs are concerned, choosing between Discover and Capital One will depend on the factors that are most important to you. Discover offers a wider range of CD terms, while Capital One has slightly higher interest rates.
Neither account requires a minimum opening deposit, but there is an early withdrawal penalty of up to 24 months’ worth of simple interest for Discover’s CDs and up to six months’ worth of interest for Capital One CDs. If there’s a chance you may need to withdraw your funds before your CD reaches maturity, Capital One is potentially a safer bet because it charges a smaller penalty than Discover.
See our picks for the best CD rates and accounts on the market>>
Money market accounts
Capital One does not currently offer a money market account.
Discover’s money market account offers up to 3.85% APY and does not impose a minimum opening deposit, minimum balance requirements, or monthly maintenance fees. This account also comes with a debit card and checks for easier access to your money. Because of these many benefits, Discover’s money market account made our list of the 10 best money market accounts available today.
Discover vs. Capital One: Additional products and services
In addition to deposit accounts, Discover offers credit cards, personal loans, student loans, home loans, and retirement accounts.
Capital One offers a number of different types of credit cards, including credit-building cards, cashback cards, travel rewards cards, student rewards cards, and business rewards cards. It also provides auto, business, and commercial loans.
Does Discover or Capital One have better APYs?
Both Discover and Capital One offer competitive APYs on their banking products. They both provide an attractive 4.00% APY on savings accounts.
However, Capital One currently offers a higher rate on its CDs. On the other hand, Discover offers money market accounts (with up to 3.85% APY) while Capital One does not offer this product.
Does Discover or Capital One have lower fees?
Both Discover and Capital One operate on no-fee models; neither bank charges monthly maintenance fees or overdraft fees for its deposit accounts.
Who should bank with Discover?
Discover and Capital One are fairly similar when it comes to their rates, fees, and product offerings. However, Discover Bank is the better choice for those who want to earn rewards on their checking account spending and/or are interested in opening a money market account.
Who should bank with Capital One?
Capital One is a solid option for those who are interested in earning as much interest as possible on their deposits. Capital One’s checking accounts currently offer 0.10% APY, while its CDs offer rates as high as 4.50% APY.
Read more: How Capital One's acquisition of Discover could affect you
