Discover CD Rates Review
Discover Bank's CD account offers high rates and no hidden fees. But is the term length worth it? Read this in-depth review before you open an CD
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- 2.20% APY for 12-month term
- 2.25% APY for 24-month term
- 2.30% APY for 5-year term
Certificate of Deposit
Discover Bank is an online financial institution offering traditional accounts, including:
- Certificate of Deposit (CD)
- Checking
- Savings
- Money Market
A CD is a type of savings account offered by most major banks. But unlike a traditional savings account, CDs "lock up" your funds for a set period time. Banks often charge a penalty if you decide to withdraw early. Once you make your initial deposit, you also cannot add more money to the account.
During a CD's term, your savings accumulate interest at a fixed rate. The rate depends on the term, which can typically range from 3 months to 10 years. Once the CD reaches maturity, you are free to withdraw both their initial investment and all accumulated interest.
Keep reading for a look at Discover Bank's CD rates.
DISCOVER CD RATES
All of Discover's CDs require a minimum $2,500 deposit to open. Here's a look at their annual percentage yield rates by term:
| CD Term | Annual Percentage Yield (APY) |
|---|---|
| 3 Months | 0.35% |
| 6 Months | 0.65% |
| 9 Months | 0.70% |
| 1 Year | 2.20% |
| 1.5 Years | 2.20% |
| 2 Years | 2.25% |
| 2.5 Years | 2.25% |
| 3 Years | 2.25% |
| 4 Years | 2.25% |
| 5 Years | 2.30% |
| 7 Years | 2.35% |
| 10 Years | 2.40% |
Start by opening multiple CDs with varying term lengths. When the first CD reaches maturity, you reinvest the money (and accrued interest) into another, often longer-term CD. Repeat this with every CD in the "ladder."
Just be aware that once that money is deposited into a CD, you won't be able to access it again for the entire length of the term.
How Discover CDs Compare
Discover's rates for CD are competitive with other online banks. Some of the company's competitors, such as TIAA Bank and Synchrony Bank, may offer higher APY rates but usually require a higher minimum deposits than Discover's $2,500.
When compared to other banks with brick-and-mortar locations, Discover's CD rates is generally superior. Here's a look at the numbers:
| Bank | APY |
|---|---|
| Wells Fargo | Standard Term CD: 0.05% - 0.35% APY. Terms of 3 months to 1 year. Minimum deposit of $2,500. Special CD: 1.15% - 1.50% APY. Terms of 9, 29, and 39 months. Minimum deposit of $5,000. Bonus of up to 1.55% APY if you maintain a linked Wells Fargo Prime/Portfolio Checking account. |
| Citibank | 0.05% - 1.75% APY. Terms ranging from 3 months to 5 years. Minimum opening deposit is $1,000 in CA, and NV, $2,500 in MD, DC, VA, and FL, $500 in all other markets. |
| Bank of America | Standard Term CD: 0.03% - 0.75% APY. Terms of 28 days to 10 years. Minimum deposit of $1,000. Featured CD: 0.07% - 1.70% APY. Terms of 12, 13, 25, and 37 months. Minimum deposit of $10,000. |
DISCOVER CD FEES AND RESTRICTIONS
Discover's fee structure for CDs is listed in full on its website. You'll pay NO:
- Monthly maintenance fees.
- Charge to deposit money via wire transfer from an external bank.
The bank charges $30 to transfer money to an external bank via wire transfer. If you have to withdraw that money early, Discover also charges a penalty as follows:
| Term | Penalty |
|---|---|
| < 1 Year | 3 Months Simple Interest |
| 1 Year to 3 Years | 6 Months Simple Interest |
| 4 Years | 9 Months Simple Interest |
| 5 Years | 18 Months Simple Interest |
| 7 to 10 Years | 24 Months Simple Interest |
The penalty amount is automatically deducted from the amount withdrawn from the account.
HOW TO WITHDRAW MONEY
You can withdraw accumulated interest any time during your CD's term. Just note that the interest you take out will no longer compound, lowering the total overall value by the end of the CD's term.
Discover sends alerts to all CD owners 30 days before their account reaches maturity. Once the account matures, you can:
- Withdraw all of the money in the account
- Reinvest the money into another CD of the same or different term
Discover gives CD owners a nine-day grace period after maturity to make changes to the account. If you don't withdraw or reinvest the money into another account by the end of the grace period, the bank will automatically put the money into another CD of the same term length.
If you open a checking or savings account with Discover, your CD funds will be deposited there automatically at the end of the term.
WHO SHOULD GET A CD?
CDs are great for people who can afford to put aside money for a set amount of time. Often, it is for a specific goal like a:
- Major purchase (a car or engagement ring)
- Vacation
- Car or home
You should never use a CD as your emergency savings account or "rainy day fund" since you'll incur a penalty if you withdraw the money early.
HOW TO GET STARTED
To open a CD account with Discover, follow these steps:
- Visit Discover
- Choose the "New to Discover" option if you've never opened an account with the bank before. If you already have an account, log into it by entering your:
- Name
- Birthdate
- Address
- Social Security number
- Employment status
- Name
- Choose the term of CD you want to open and enter your deposit amount.
- Once your application is approved, you have 45 days to fund the account. This can be done via:
- Wire transfer from another bank
- Transferring funds over the phone (which you can only do when initially funding the account)
- Mailing a check to Discover's address:
- Wire transfer from another bank
Discover Bank
PO Box 30417
Salt Lake City, UT 84130
After that, your new CD is set up and actively earning you money.
Bottom Line
Discover Bank's CDs offer competitive rates for those looking to boost medium to long-term savings. As always, you should shop around to find the best product and rates for your goals.
Disclaimer: Opinions expressed here are author's alone. Please support CreditDonkey on our mission to help you make savvy decisions. Our free online service is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content.
Disclaimer: This content was first published on May 22, 2019. This content may have been updated on July 13, 2019. Information including rates, fees, terms and benefits may vary, be out of date, or not applicable to you. Information is provided without warranty. Please check the bank's website for updated information.
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