The Fed Just Cut Rates -- but This High-Yield Savings Account Is Still a Great Deal

With the Federal Reserve cutting its benchmark interest rate for the first time in more than four years, many Americans are (correctly) worried that the generational high yields we've seen from online savings accounts could be in jeopardy.

However, that doesn't mean that it's time to abandon high-yield savings accounts. In fact, quite the opposite is true. As we enter a falling-rate environment, it is important to realize that online-based high-yield savings accounts that offer yields several times greater than the national average are likely to continue doing so. And if you're looking for a new savings account, the Discover® Online Savings account is one that could be worth a closer look.

The Discover® Online Savings account

The Discover® Online Savings account is a high-yield savings account product from Discover® Bank (the same Discover that issues popular cash back credit cards). And there are a few good reasons why you might want to take a closer look at the account.

If you're looking to make a change in your banking relationship, click here to open a Discover® Online Savings account with no minimum initial deposit.

Our Picks for the Best High-Yield Savings Accounts of 2024

Product	APY	Min. to Earn
American Express® High Yield Savings Member FDIC. APY 3.80% Rate info 3.80% annual percentage yield as of January 4, 2025. Terms apply. Min. to earn $0 Open Account for American Express® High Yield Savings On American Express's Secure Website. Member FDIC.	3.80% Rate info 3.80% annual percentage yield as of January 4, 2025. Terms apply.	$0	Open Account for American Express® High Yield Savings On American Express's Secure Website.
Capital One 360 Performance Savings Member FDIC. APY 3.80% Rate info See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Dec. 6, 2024. Rates are subject to change at any time before or after account opening. Min. to earn $0 Open Account for Capital One 360 Performance Savings On Capital One's Secure Website. Member FDIC.	3.80% Rate info See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Dec. 6, 2024. Rates are subject to change at any time before or after account opening.	$0	Open Account for Capital One 360 Performance Savings On Capital One's Secure Website.
Western Alliance Bank High-Yield Savings Premier Member FDIC. APY 4.40% Rate info The annual percentage yield (APY) is accurate as of Jan. 2, 2025, and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY. Min. to earn $500 to open, $0.01 for max APY Open Account for Western Alliance Bank High-Yield Savings Premier On Western Alliance Bank's Secure Website. Member FDIC.	4.40% Rate info The annual percentage yield (APY) is accurate as of Jan. 2, 2025, and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY.	$500 to open, $0.01 for max APY	Open Account for Western Alliance Bank High-Yield Savings Premier On Western Alliance Bank's Secure Website.

Even though the Federal Reserve recently lowered its benchmark rate, the account still has a yield that is significantly higher than the national average of 0.42%. Currently, the Discover® Online Savings account offers an APY of 3.75%%. This rate is subject to change at any time, and to be clear, it's likely to trend downward if the Fed keeps cutting rates, but you can expect the account will continue to have an above-average yield.

In addition to the high yield, there are a few other perks of this account:

• The Discover® Online Savings account has no minimum balance requirement. You can literally get started with $0.01.
• There are no monthly maintenance fees, and the only significant cost is a $30 fee for outgoing wire transfers.
• There's no limit on withdrawals, while many competitors limit savings withdrawals to six per month.
• Discover has a top-rated mobile app for both iOS and Android devices.
• There are several ways to deposit and withdraw money, including mobile deposit through the app, online transfers to internal or external bank accounts, and direct deposit.

To be sure, there's no such thing as a perfect savings account, and this isn't an exception. For example, the Discover® Online Savings account doesn't offer ATM access. But it certainly checks a lot of the boxes savers typically look for.

A robust banking ecosystem

In addition to all the above, the Discover® Online Savings account could be an especially good fit if you already have a Discover credit card, or if you're also looking for an online checking account (the Discover® Cashback Debit account is one of Motley Fool Money's top-rated checking accounts).

In addition to offering excellent checking accounts, credit cards, and CDs, it's also important to mention that some of Discover's products complement each other well. As an example, I mentioned in the previous section that the Discover® Online Savings account doesn't offer ATM access. However, it's easy to transfer money between it and the Discover® Cashback Debit account, which does offer ATM access.

Also, for savings that you aren't expecting to need anytime soon, Discover offers an excellent lineup of high-yield CDs with terms as long as 10 years.

In a nutshell, if you're looking to replace your branch-based bank, as opposed to simply looking for a place to earn a higher yield on your savings, the Discover® Online Savings account could be what you're looking for.